Seigniorage in the 21st Century: A Study of the Profits from Money Creation in the United Kingdom and Denmark
Preprint
- 21 February 2017
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
This paper develops a new theory of seigniorage suited to modern economies where the majority of money is created not by the state or central bank but by commercial banks and other monetary financial institutions via their lending activity. We identify four different forms of seigniorage that take account of the modern institutional separation between the state, the central bank, commercial banks and the non-bank private sector in terms of their identities as ‘money creators’ and ‘money users’. The new typology differentiates between seigniorage profits arising from interest rate spreads on stocks of created money and profits arising from flows of interest payments on newly created assets. We illustrate our theoretical framework with empirical data on commercial bank seigniorage and related variables in the United Kingdom and the Denmark over the past quarter century.This publication has 38 references indexed in Scilit:
- New paradigm in macroeconomics: solving the riddle of Japanese macroeconomic performanceChoice Reviews Online, 2005
- The role of the state and the hierarchy of moneyCambridge Journal of Economics, 2001
- The Generation and Distribution of Central Bank Seigniorage in the Czech Republic, Hungary and PolandSSRN Electronic Journal, 1999
- Reserve requirements, currency substitution, and seigniorage in the transition to European monetary unionOpen Economies Review, 1996
- Reserve Requirements and the Inflation TaxJournal of Money, Credit and Banking, 1989
- A Guide to Public Sector Debt and DeficitsEconomic Policy, 1985
- Bank Market Structure and Monetary ControlJournal of Money, Credit and Banking, 1985
- Seigniorage and the Case for a National MoneyJournal of Political Economy, 1982
- Government Revenue from InflationJournal of Political Economy, 1971
- Weisz, Paul B. Biology. New York: McGraw-Hill Book Company, 1954. 679 P. $6.50Science Education, 1954