7 Seigniorage in the EC
Author:
Mr. Jacob A. Frenkel https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Morris Goldstein https://isni.org/isni/0000000404811396 International Monetary Fund

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Language:
English
Print Publication Date:
24 Apr 1996
Keywords:
BOOK; exchange rate; nominal interest rate; EC country; deutsche mark; policy rule; exchange-rate crisis; Exchange rates; Real exchange rates; Currencies; Inflation; Global; Europe; Asia and Pacific; North America; Middle East; cash flow; financial market integration; fiat money; EMS member; integration in Europe; Financial integration; Reserve requirements; Interest payments

Abstract

The paper measures the effects of the integration of European financial markets and lower inflation in the European Monetary System (EMS) on the revenue from seigniorage for the European Community (EC) member countries, with particular focus on the high-inflation countries. Assuming that by 1992 all EC members participate fully in the EMS and reserve requirements are unified, the revenue from seigniorage will be reduced by about 2 percentage points of GDP in Greece and Portugal and by 0.5–0.8 percentage points in Italy and Spain. Two different measures of seigniorage yield similar results regarding the change but differ regarding the level.

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Cover Functioning of the International Monetary System
Functioning of the International Monetary System
ISBN:
9781557755544
Publication Date:
24 Apr 1996
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557755544.071
Pages:
507