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.


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.