DEFINITION of 'Demurrage'

A term used in currency trading to denote the cost of currency ownership and/or storage. It is essentially considered to be the cost of carrying money, and is in some respects considered superior to interest payments, as it stimulates currency circulation and economic growth.

BREAKING DOWN 'Demurrage'

In a physical sense, demurrage represents a delay that occurs during the transportation of goods via truck. When this happens, the trucking firm delivering the product can opt to pay a flat fee to the receiver to cover any loss incurred as a result of the delay. This fee can be assessed on an hourly basis. Or in the case of gold, demurrage is simply the costs associated with storage of buillon.

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