- Seigniorage derived from specie—metal coins—is a tax, added to
the total price of a coin (metal content and production costs),
that a customer of the mint had to pay to the mint, and that was
sent to the sovereign of the political area. - Seigniorage
derived from notes is more indirect, being the difference
between interest earned on securities acquired in exchange for
bank notes and the costs of producing and distributing those
notes. Seigniorage is a convenient source of revenue for some
governments. Scenario A  A person has one ounce of gold, trades
it for a government-issued gold certificate (providing for
redemption in one ounce of gold), keeps that certificate for a
year, and then redeems it in gold. That person ends up with
exactly one ounce of gold again. No seigniorage occurs. Scenario
B  Instead of issuing gold certificates, a government converts
gold into currency at the market rate by printing paper notes. A
person exchanges one ounce of gold for its value in currency.
She keeps the currency for