Seignorage

Abstract

Full-bodied monies such as gold coin contain metal approximately equal in value to the face value of the coin. Under the gold standard, metal could be brought to the mint and freely coined into gold, less a small seigniorage charge for the privilege. Subsidiary or token coin and paper money by contrast cost much less to produce than their face value. The excess of the face value over the cost of production of currency is also called seigniorage, because it accrued to the seigneur or ruler who issued the currency, in early times.