Seigniorage

AAA

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 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 TERMS
  1. Fiat Money

    Currency that a government has declared to be legal tender, but ...
  2. Digital Currency Exchanger - DCE

    A market maker who exchanges legal tender for electronic currency, ...
  3. Hard Money

    1. Funding by a government or organization that is repetitive, ...
  4. Gold Standard

    A monetary system in which a country's government allows its ...
  5. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  6. Soft Money

    1. The "one-time" funding from governments and organizations ...
Related Articles
  1. The Fundamentals Of Forex Fundamentals
    Forex Education

    The Fundamentals Of Forex Fundamentals

  2. A Primer On The Forex Market
    Options & Futures

    A Primer On The Forex Market

  3. Getting Started In Forex
    Options & Futures

    Getting Started In Forex

  4. Understanding World Bank Data
    Investing

    Understanding World Bank Data

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center