Seigniorage

As seigniorage ( historically also called " seigniorage ", " seigniorage " or " beat rate ", pronounced [ zɛnjora ː ʒ ( ə ) ] ), the agreement reached by the central bank profit called, created by the issuance of central bank money, keep the household.

Historical

The term derives from the French word for feudal seigneur or lord, as these had ( the so-called coinage ) in the Middle Ages, the exclusive right to mint coins. The gain from the creation of money was found at that time from the difference between the metal value and production costs on the one hand and the value of the coins issued on the other. Since the feudal lord usually had the monopoly for stamping coins, fell at his also the Seignioragegewinn.

The ( aspired ) height of this shock treasure has been intensively discussed in the early economic literature. First, the privilege of a moderate seignorage is undisputed. On the one hand it is necessary to cover the costs of stamping, so this should not fall of the public to load. On the other hand, there is the benefit of imprinting: A coin has a higher value than an equally heavy piece of embossed precious metal. If the seigniorage lower than in neighboring countries, as an outflow of coins in neighboring countries was feared. Excessive seigniorage leads (similar debasement ) to inflation.

Forms of seigniorage

Seigniorage can be viewed from different directions and are therefore defined differently.

Monetary seigniorage

Under monetary seigniorage is defined as the increase in the nominal stock of central bank money:

"Under seigniorage is defined as the real income that can achieve thanks to the central bank monopoly due to the fact the government or the central bank that hold private interest-free central bank money "

The so defined seigniorage is calculated by adjusting for the period in the newly created central bank money supply to inflation:

Where m = the increase in the monetary base, M = the monetary base and P = the price level are.

Since the nominal money demand is expanded by inflation and economic growth (see quantity equation ), the monetary base and thus the monetary seigniorage rises by these factors. Therefore, one can divide the seigniorage into a growth component and an inflation component. The second component acts as an inflation tax.

The monetary seigniorage not equal the profit of the central bank of central bank money creation. At this income also carry unremunerated reserve requirements of credit institutions at the central bank in

Fiscal seigniorage

In fiscal seigniorage is defined as the income of the state from monetary seigniorage. While historically the right to issue notes was also awarded to private central banks (and the fiscal seigniorage then from the license fees of private banks existed ), there is now almost everywhere a central bank monopoly. The seigniorage of the central bank (in terms of notes and balances with central banks ) and the State as holder of the Münzregals ( the coins respect ) now flows directly to.

Indirectly, however, seigniorage accrues to the State. Unless the State has direct access to the central bank, he can use the newly created agent directly. In the case of independent central banks in the State gets the seigniorage on the distribution of the profits of the central bank. So in 1987 it was the Treasury in the UK plan the equivalent value of newly printed banknotes and coins in the amount of 1.05 billion pounds in the budget. In the same year bills in the amount of 11.9 billion DM were newly laid out in Germany. However, the German Federal Government could only have the Bundesbank profit of 0.3 billion DM.

Thus, the seigniorage part of government revenue represents the effect of the seigniorage it is equivalent to a tax on holding cash. In finance, science is therefore a concept which will be discussed "optimal seigniorage ": An optimal seigniorage is achieved when the marginal social costs (eg, a distortion of the control information of the prices or the generation of inflation) seigniorage correspond to those of the other taxes. Empirically, it can be seen that in fact the seigniorage in countries with inefficient tax systems have a higher contribution to the financing of government expenditure does than in countries with effective tax systems.

Opportunity cost concept of seigniorage

The seigniorage can be defined in terms of opportunity costs. From the perspective of households seigniorage equal to the cost of central bank money attitude. These correspond to the loss of interest which may be obtained at a yield safe investments.

, Where i = the safe overnight rate, M = the monetary base, and p = the price level are.

This corresponds to the calculation of cash holdings in the central bank's balance sheet. Cash holdings are stated there. According to the market interest method of margin contribution equal to the overnight rate as the notes do not bear interest.