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Seignorage from Full-Reserve Banking

Published in Lainà, Patrizio, Full-Reserve Banking: Separating Money Creation from Bank Lending, PhD Thesis, University of Helsinki (Forthcoming)

14 Pages Posted: 15 Nov 2017  

Patrizio Lainà

University of Helsinki, Faculty of Social Sciences, Department of Political and Economic Studies

Date Written: November 13, 2017

Abstract

I provide estimates of seignorage revenue generated by full-reserve banking (FRB). Seignorage is estimated both for the transition to FRB (only once) and for running a FRB system (annually). It turns out that, on the aggregate level, the US is already effectively running a FRB system and, consequently, it would not receive any transition seignorage. In other selected countries the transition seignorage ranges from 31% to 55% of GDP. The annual seignorage ranges from 1% to 8% of GDP in selected countries. The annual seignorage generated by FRB would be very significant source of income for the government. Thus, FRB has a great potential to extend the fiscal capacity available to governments.

Keywords: Seignorage, Full-Reserve Banking, Sovereign Money

JEL Classification: E42, E51, E62

Suggested Citation

Lainà, Patrizio, Seignorage from Full-Reserve Banking (November 13, 2017). Published in Lainà, Patrizio, Full-Reserve Banking: Separating Money Creation from Bank Lending, PhD Thesis, University of Helsinki (Forthcoming). Available at SSRN: https://ssrn.com/abstract=3065319

Patrizio Lainà (Contact Author)

University of Helsinki, Faculty of Social Sciences, Department of Political and Economic Studies ( email )

Helsinki
Finland
+358 9 1912 4883 (Phone)

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