Editing Seigniorage (section)

=={{anchor|Scenario A|Scenario B}}Examples==
Seigniorage is the positive return, or [[carry (investment)|carry]], on issued notes and coins (money in circulation). [[Demurrage currency|Demurrage]], the opposite, is the cost of holding currency.

An example of an exchange of gold for "paper" where no seigniorage occurs is when 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 redeems it in gold. That person began with and ends up with exactly one ounce of gold.

In another scenario, instead of issuing gold certificates a government converts gold into non-[[gold standard]] based currency at the market rate by printing paper notes. A person exchanges one ounce of gold for its value in that [[currency]], keeps the currency for one year, and exchanges it for an amount of gold at the new market value. If the value of the currency relative to gold has changed in the interim, the second exchange will yield less (or more) than one ounce of gold (assuming that the value, or [[purchasing power]], of one ounce of gold remains constant through the year). If the value of the currency relative to gold has decreased, the person receives less than one ounce of gold and seigniorage occurred. If the value of the currency relative to gold has increased, the person receives more than one ounce of gold and demurrage occurred; seigniorage did not occur.