What is signerage?

Answer 1

Seigniorage is the profit made by a government or authority from issuing currency, particularly the difference between the face value of money and the cost of producing it. When new money is created, it can be used to fund government spending without raising taxes or borrowing, effectively allowing the issuer to benefit financially. This concept is essential in understanding monetary policy and the economic implications of currency creation. However, excessive reliance on seigniorage can lead to inflation if it results in an oversupply of money.