Central bank seigniorage in the Czech Republic

Abstract

The concept of total gross seigniorage is used to analyse sources and uses of central bank seigniorage in the Czech Republic during the period 1993–1997. A comprehensive framework for measuring total seigniorage and its main components is presented and estimates of seigniorage revenues (sources and uses) are computed and analysed. The study explains why the concept of monetary seigniorage should not be used as an estimate of government gains from money creation and shows that seigniorage revenues have never been extensively used as a tool for financing expenditures of the Czech government.