From: tcmay@got.net (Timothy C. May)
Date: Sun, 7 Apr 1996 09:35:23 +0800
To: cypherpunks@toad.com
Subject: Seignorage
Message-ID: <ad8c243729021004a47a@[205.199.118.202]>
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(I'm cc:ing quibblepunks@toad.com and dictionarypunks@toad.com because of
their obvious and inordinate interest, so to speak, in such matters.)

>From the "MIT Dictionary of Modern Economics," 4th Edition, 1992:

"seignorage. Historically, and as applied to money, this was a levy on
metals brought to the mint for coining, to recover the cost of minting and
provide a revenue to the ruler who claimed it as a prerogative. In recent
monetary literature the term has been revived and applied to the net
revenue derived by any money-issuing body, e.g. a note-issuing authority.
It is applied more especially to a country whose currency is held by
foreigners for trading or reserve purposes. In this case the seignorage
amounts to the return on the extra assets, real or financial, which the
country is enabled to acquire because of the external holdings of its
currency, less the interest paid on the assets in which the foreigners
invest their holdings, and less any extra administrative costs arising from
the international role of its money."

So it would seem that seignorage certainly can be used as a term for the
interest the note-issuer for digital cash or any similar
non-interest-bearing notes (banknotes, traveller's checks, e-cash in many
forms, etc.). And the connection with the "float" is clear.

--Tim May

Boycott "Big Brother Inside" software!
We got computers, we're tapping phone lines, we know that that ain't allowed.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA  | knowledge, reputations, information markets,
Higher Power: 2^756839 - 1  | black markets, collapse of governments.
"National borders aren't even speed bumps on the information superhighway."