mercoledì 17 agosto 2016

Chit-chat with Bill English, Deputy Prime Minister of New Zealand on seigniorage

My email was:

July 23, 2016

To: Hon Bill English, Minister of Finance of New Zealand

On seigniorage as liability of the Reserve Bank to the Treasury

Dear Hon Bill English,

the NZ Reserve Bank buys  banknotes and pays  the  production cost
(including  a margin)  for  each  order  of  notes.  Banknotes  are
later  sold  to  trading  banks  at their face value and in turn the
face value of currency in circulation becomes a liability of the
Reserve Bank toward the NZ Treasury (seigniorage on the principal).

In fact, the correct definition of seigniorage is the difference in
value from the cost of production of the monetary medium (coins,
banknotes, electronic currency a.k.a. deposits) and is face value. In
countries where banks are NOT sovereign, the seigniorage must be
returned to the body sovereign (local Treasury Department).

Questions:
- Do you have a recorded asset in the Treasury books matching the
Reserve Bank liability over currency in circulation ?
- If not, why ?
- If it is not the Treasury, who is the current net beneficiary of
this Reserve Bank's liability ?
- Is it a NZ entity or an alien body ?
- Do you believe in aliens ?

Thank You for Your kind attention and I look forward for Your answers.


Marco Saba
President at IASSEM, Italy


The answer:
 

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