Definition

The profit made by a government from producing currency, which is the difference between the value of the metal used and the value printed on the coins.

Example

The government earns seigniorage when it mints coins that are worth more than the cost of the materials used to make them.

Conversation

Have you ever heard about seigniorage in economics?

Yeah, it's the profit governments make from minting coins, right?

Exactly! It's interesting how much revenue can come from just the difference in value.

For sure, it really shows how money works behind the scenes.

Synonyms & Antonyms

Root Explanation

Seigniorage is derived from the Old French "seignior" (meaning lord or master) and the suffix "-age" (indicating a state or condition). The term originally referred to the rights and profits that a lord would derive from the minting of currency, thus relating to the authority and benefits of the lord over the currency.

Memory Tip

Think of a 'lord' ('seignior') who has the 'rights' ('-age') to profit from currency, which helps you remember that seigniorage refers to the profit made from issuing money.

Visually Confused Words