can be thought of as the amount of interest that a government would have to pay for the amount of currency it has outstanding; the more physical dollars people are willing to hold, the less T-bills a government has to pay interest on.
100) Another policy is inflation, which is relatively prevalent in developing countries and enhanced by seignorage
In contrast, experts believe that the lost seignorage
is the most important economic cost of euroisation.
peso was to capture seignorage
(the revenue earned by the sovereign from
In some EU countries, seignorage
revenues from the euro cash changeover had been considerable.
Reserve-issuing countries gain seignorage
, or the revenue that emerges from the creation of money.
Aizenman, Joshua, 1989, "The competitive externalities and the optimal seignorage
," National Bureau of Economic Research, working paper, No.
These debasements produced large amounts of seignorage
revenue for the state, temporarily lessening its need to borrow funds.
6 per cent of GDP), arising from seignorage
from the issuance of new coins in Euro and increased dividends from public enterprises.
Unilateral 'euroisation', where a 'peripheral' country simply adopts the currency of another ('centre') nation, without a fair share of the common seignorage
, without access to the discount window and other lender of last resort facilities, and without a voice in the decision-making processes of the centre's central bank should be of interest only to a chronically mismanaged economic basket case, whose only hope of achieving monetary stability is to unilaterally surrender monetary sovereignty.
Again, the period after 1995 has not been so dramatic, as the effects of early price-liberalization work their way out and more governments realize that seignorage
is not an all-purpose source of revenue in a market environment.
Log per-capita GDP should capture in part the greater dependence of less developed countries on seignorage
(the profit to the state from money creation) because they lack effective tax collection systems.