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

Research output: Working paperResearch

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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.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School, CBS
Number of pages62
Publication statusPublished - 2017
SeriesMPP Working Paper


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

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