Seignorage: Italian Judge Condemns Central Bank

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Economy

Food for Thought

A Justice of the peace in the southern Italian town of Lecce has held that the Italian Central Bank's practice of retaining the seignorage on paper money for its own profit is illegal. The amount in question is a total of 5 billion Euro for Italian Lira paper-money issued in the time period from 1996 to 2003. Seignorage is the difference between the cost of producing banknotes and the nominal value of the notes.

Typically, a bank note costs cents to produce but it "sells" for its full value, whatever the printed numbers say...

The legal case was sustained by an Italian consumers association - ADUSBEF - which deals with consumer implications of banking, financial and postal services as well as insurances.

See article on La Leva di Archimede's site:
Italian Central Bank To Pay Back Illegal Profits From Seignorage - Judge

Or the Italian report on Rome's daily La Repubblica

 

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posted by Sepp Hasslberger on Friday October 7 2005
updated on Thursday October 13 2005

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