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
Date Written: November 13, 2017
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: Suggested Citation