ABSTRACT
This chapter provides a tool for raising public sector revenue, seignorage. Seignorage provides an additional way for governments to raise revenue from the economy. Seignorage, has been long used as a means to finance the operation of governments, and it still provides a component of public sector revenue in many countries. In contemporary financial and fiscal systems in many countries, central banks administer the issue of money and earn the seignorage revenue. Revenue from seignorage is deeply intertwined with inflation. If a government who controls the issue of money aims to raise seignorage revenue by expanding the monetary base, then the increased amount of money in the economy can stimulate inflation, depending on conditions of economic growth. When a foreign currency circulates within an economic system alongside or as a substitution for the local domestic currency, the government loses its grip on seignorage revenue.
