Eurowinners and Eurolosers: The Distribution of Seigniorage Wealth in Emu

Abstract

The European Monetary Union (EMU) will involve socialization of the existing seigniorage wealth of the national central banks, because the Euro will have to be bought by these banks in exchange for assets which have been accumulated in the historical process of money creation. This socialization will create windfall gains for countries with relatively low monetary bases such as France and the UK and it will be disadvantageous for countries like Germany, the Netherlands and Spain which will suffer per capita wealth losses of between 406 and 182 ecus. This paper quantifies the gains and losses in seigniorage wealth under alternative membership and bank regulation scenarios.