Seigniorage

Filed Under » ,
Dictionary Says

Definition of 'Seigniorage'

The difference between the value of money and the cost to produce it - in other words, the economic cost of producing a currency within a given economy or country. If the seigniorage is positive, then the government will make an economic profit; a negative seigniorage will result in an economic loss. 
Investopedia Says

Investopedia explains 'Seigniorage'

Seigniorage may be counted as revenue for a government when the money that is created is worth more than it costs to produce it. This revenue is often used by governments to finance a portion of their expenditures without having to collect taxes. If, for example, it costs the U.S. government $0.05 to produce a $1 bill, the seigniorage is $0.95, or the difference between the two amounts.

Related Definitions

  • Currency

    A generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and ...
    Read More »
  • Fiat Money

    Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on ...
    Read More »
  • Gold Standard

    A monetary system in which a country's government allows its currency unit to be freely converted into fixed amounts of gold and vice versa. The exchange rate under the gold standard ...
    Read More »
    • Hard Money

      1. Funding by a government or organization that is repetitive, rather than a one-time grant. Examples include ongoing government daycare subsidies or firms that pay annual scholarships ...
      Read More »
    • Soft Money

      1. The "one-time" funding from governments and organizations for a project or special purpose. 2. Paper currency, as opposed to gold, silver, or some other coined metal.
      Read More »
    • Economic Profit (Or Loss)

      The difference between the revenue received from the sale of an output and the opportunity cost of the inputs used. This can be used as another name for "economic value added" (EVA).
      Read More »
    • Monetary Policy

      The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary ...
      Read More »
    • Numismatics

      The study of the physical embodiment of various payment media (i.e. currencies). The study of numismatics as it applies to coins, is often in the research of the production and use of ...
      Read More »
    • Digital Currency Exchanger - DCE

      A market maker who exchanges legal tender for electronic currency, or who exchanges one electronic currency for another. A digital currency exchanger charges a commission for this type ...
      Read More »

Articles Of Interest

Partner Links