Seigniorage, banking, and the optimal quantity of money

This paper discusses seigniorage in an economy with imperfect competition in the banking sector. The amount of total seigniorage and its division between the central bank and the banking sector are derived by using the opportunity cost concept of seigniorage. The paper analyzes the impact of changes...

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Bibliographic Details
Published in:Journal of banking & finance 1997-06, Vol.21 (6), p.781-796
Main Authors: Baltensperger, Ernst, Jordan, Thomas J.
Format: Article
Language:English
Subjects:
Banking
Banking industry
Finance
Monetary theory
Money
Money creation
Money supply
Quantity theory of money
Seigniorage
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Summary:This paper discusses seigniorage in an economy with imperfect competition in the banking sector. The amount of total seigniorage and its division between the central bank and the banking sector are derived by using the opportunity cost concept of seigniorage. The paper analyzes the impact of changes in inflation, reserve requirements, competition and technology on the division of seigniorage and on the welfare loss and relates the analysis to the concept of the optimal quantity of money.
ISSN:0378-4266
1872-6372
DOI:10.1016/S0378-4266(97)00008-3