Seigniorage, electronic money and financial independence of central banks

Abstract

Recently, the subject of seigniorage - the revenues deriving from the monetary monopoly - has attracted the attention of academics and policy-makers. The authors discuss the reasons for this interest before undertaking a survey of the implications of a large-scale introduction of electronic money products on the seigniorage revenues and financial independence of central banks in the group of G10 countries. In countries with decreased seigniorage revenues and a high percentage of e-money the financial independence of central banks are negatively affected as a result of their inability to compensate for increasing operational expenses. Measures such as the limitation of e-money issuance and the imposition of requirements on e-money help in curtailing operational costs related to salaries, pensions, publications and banknote circulation, among others. JEL Codes: E58, G20