But they, too, enjoyed seigniorage income that let them profit from a tightly controlled interest rate and high economic growth environment.
And the public purse gets a second boost from seigniorage, the difference between the value of the coins and the cost of producing them.
One reflected the cost of turning, say, an ounce of silver into a coin (this included minting costs plus a government coinage tax known as seigniorage).
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Providing 100% of the seigniorage to African nations or at least an 85% to 15% split in their favor might even incentivize an African nation to yuan-ize its economy.
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Private-payments companies threaten to take away the government's ability to control the money supply and benefit from seigniorage, the difference between the cost to produce the money and its face value.
Every PhD economist is taught about seigniorage.
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Denninger asserts that monetary sovereign issuers possess not only the privilege, but the obligation, of seigniorage, which Denninger refers to as bi-directional since sovereigns have the responsibility of maintaining a stable price level during times of both economic expansion and economic contraction.
The second step would be for the PBC to perform dollar-for-yuan foreign exchange reserve swaps with African central banks, with China offering to split the seigniorage (the difference between the face value of currency and the cost to produce it) with the African nations as a form of foreign aid.
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As I explained in a book I co-authored some time ago, in an environment like this bankers have grown up as abacus bankers, record keepers of money flows who derive income from seigniorage, from the passive creation of money through interest bearing-loans and government-backed securities rather than from true banking, and from active risk management.
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