Seignorage

Discipline: Economics

Seignorage, or Seigneurage, is the revenue a government generates by issuing coins and paper currency.

Seignorage equals to the face value of the currency minus the costs of producing it.

Some economists refer to seignorage as inflation tax, since seignorage can also be perceived as the revenue that the government chose not to collect from the public as a tax. In other words, seignorage is in fact paid by the currency holders, since their money loses value due to increasing money supply.

Also see: budget deficit, budget surplus, fiscal policy, government spending, monetary policy, money supply, taxation

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