Seigniorage in the 21st Century: A Study of the Profits from Money Creation in the United Kingdom and Denmark

Ole Bjerg, Duncan McCann, Laurie Macfarlane, Rasmus Hougaard Nielsen, Josh Ryan-Collins

Publikation: Working paperForskning

Resumé

This paper develops a new theory of seigniorage suited to modern economies where the majority of money is created not by the state or central bank but by commercial banks and other monetary financial institutions via their lending activity. We identify four different forms of seigniorage that take account of the modern institutional separation between the state, the central bank, commercial banks and the non-bank private sector in terms of their identities as ‘money creators’ and ‘money users’. The new typology differentiates between seigniorage profits arising from interest rate spreads on stocks of created money and profits arising from flows of interest payments on newly created assets. We illustrate our theoretical framework with empirical data on commercial bank seigniorage and related variables in the United Kingdom and the Denmark over the past quarter century.
This paper develops a new theory of seigniorage suited to modern economies where the majority of money is created not by the state or central bank but by commercial banks and other monetary financial institutions via their lending activity. We identify four different forms of seigniorage that take account of the modern institutional separation between the state, the central bank, commercial banks and the non-bank private sector in terms of their identities as ‘money creators’ and ‘money users’. The new typology differentiates between seigniorage profits arising from interest rate spreads on stocks of created money and profits arising from flows of interest payments on newly created assets. We illustrate our theoretical framework with empirical data on commercial bank seigniorage and related variables in the United Kingdom and the Denmark over the past quarter century.
SprogEngelsk
Udgivelses stedFrederiksberg
UdgiverCopenhagen Business School, CBS
Antal sider62
StatusUdgivet - 2017
NavnWorking paper

Emneord

  • Seigniorage
  • Money creation
  • Central banks
  • Banks
  • Financial intermediation
  • Interest rates
  • Financialization

Citer dette

Bjerg, O., McCann, D., Macfarlane, L., Hougaard Nielsen, R., & Ryan-Collins, J. (2017). Seigniorage in the 21st Century: A Study of the Profits from Money Creation in the United Kingdom and Denmark. Frederiksberg: Copenhagen Business School, CBS. Working paper
Bjerg, Ole ; McCann, Duncan ; Macfarlane, Laurie ; Hougaard Nielsen, Rasmus ; Ryan-Collins, Josh. / Seigniorage in the 21st Century : A Study of the Profits from Money Creation in the United Kingdom and Denmark. Frederiksberg : Copenhagen Business School, CBS, 2017. (Working paper).
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abstract = "This paper develops a new theory of seigniorage suited to modern economies where the majority of money is created not by the state or central bank but by commercial banks and other monetary financial institutions via their lending activity. We identify four different forms of seigniorage that take account of the modern institutional separation between the state, the central bank, commercial banks and the non-bank private sector in terms of their identities as ‘money creators’ and ‘money users’. The new typology differentiates between seigniorage profits arising from interest rate spreads on stocks of created money and profits arising from flows of interest payments on newly created assets. We illustrate our theoretical framework with empirical data on commercial bank seigniorage and related variables in the United Kingdom and the Denmark over the past quarter century.",
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Bjerg, O, McCann, D, Macfarlane, L, Hougaard Nielsen, R & Ryan-Collins, J 2017 'Seigniorage in the 21st Century: A Study of the Profits from Money Creation in the United Kingdom and Denmark' Copenhagen Business School, CBS, Frederiksberg.

Seigniorage in the 21st Century : A Study of the Profits from Money Creation in the United Kingdom and Denmark. / Bjerg, Ole; McCann, Duncan; Macfarlane, Laurie; Hougaard Nielsen, Rasmus; Ryan-Collins, Josh.

Frederiksberg : Copenhagen Business School, CBS, 2017.

Publikation: Working paperForskning

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T1 - Seigniorage in the 21st Century

T2 - A Study of the Profits from Money Creation in the United Kingdom and Denmark

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N2 - This paper develops a new theory of seigniorage suited to modern economies where the majority of money is created not by the state or central bank but by commercial banks and other monetary financial institutions via their lending activity. We identify four different forms of seigniorage that take account of the modern institutional separation between the state, the central bank, commercial banks and the non-bank private sector in terms of their identities as ‘money creators’ and ‘money users’. The new typology differentiates between seigniorage profits arising from interest rate spreads on stocks of created money and profits arising from flows of interest payments on newly created assets. We illustrate our theoretical framework with empirical data on commercial bank seigniorage and related variables in the United Kingdom and the Denmark over the past quarter century.

AB - This paper develops a new theory of seigniorage suited to modern economies where the majority of money is created not by the state or central bank but by commercial banks and other monetary financial institutions via their lending activity. We identify four different forms of seigniorage that take account of the modern institutional separation between the state, the central bank, commercial banks and the non-bank private sector in terms of their identities as ‘money creators’ and ‘money users’. The new typology differentiates between seigniorage profits arising from interest rate spreads on stocks of created money and profits arising from flows of interest payments on newly created assets. We illustrate our theoretical framework with empirical data on commercial bank seigniorage and related variables in the United Kingdom and the Denmark over the past quarter century.

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KW - Central banks

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KW - Financial intermediation

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KW - Money creation

KW - Central banks

KW - Banks

KW - Financial intermediation

KW - Interest rates

KW - Financialization

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Bjerg O, McCann D, Macfarlane L, Hougaard Nielsen R, Ryan-Collins J. Seigniorage in the 21st Century: A Study of the Profits from Money Creation in the United Kingdom and Denmark. Frederiksberg: Copenhagen Business School, CBS. 2017.