Central Bank Seigniorage: Czech Republic 1993-1997

In this paper the concept of total gross seigniorage is used to analyze sources and uses of central bank seigniorage revenues in the Czech Republic during the period 1993-1997. A comprehensive framework for measuring total gross seigniorage and its main components is presented and estimates of seigniorage revenues (sources and uses) are computed and analyzed. The study shows that the conventional concept of monetary seigniorage should not be used as an estimate of government gains from money creation. Moreover, the analysis of the scope of budget deficit financing through money printing in the considered period in the Czech Republic presented in the paper shows that revenue from the creation of money has never been extensively used as a tool for financing government expenditures.