Seigniorage

Matt Lyons

Seigniorage

Generally refers to the profit made by issuing currency. A government minting currency earns profit difference between the face value of coins and their production costs.

More recently, private profits made by banks represent a form of ‘seignorage’ in their own right. Banks make money on the spread between interest rates on loans and those paid to deposits. Banks currently pay very low interest on deposits thanks to deposit insurance provided by government.

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