What is seignorage?

Question

What is seignorage?

Quizplus · Accepted Answer

Seignorage refers to the profit generated by a government by printing money and using it to acquire assets. It is essentially the difference between the value of the currency created and the cost of producing it. Therefore, option B is the correct answer.

Option A is incorrect as it refers to the return on holding foreign currency reserves, which is not related to seignorage. Option C is also incorrect as it refers to the interest rates associated with Special Drawing Rights (SDRs), which is a form of international reserve asset, and not directly related to seignorage. Option D is incorrect as it refers to the process of linking a currency to another currency or a basket of currencies, and not directly related to seignorage.

What Is Seignorage