Author Topic: South Korean Coin Database  (Read 393 times)

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Offline Verify-12

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    • Circulation Coins of the Republic of Korea
Re: South Korean Coin Database
« Reply #15 on: December 03, 2017, 10:28:29 PM »
Thanks so much, Peter.

Yep. I think that these authors were calling this measure for liquidity "seigniorage."   There is also another definition of "seigniorage" called "monetary seigniorage," which seems similar.  See below.

From Wikipedia:

"*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.[1]

*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.[2]

The term also applies to monetary seignorage, where sovereign-issued securities are exchanged for newly minted bank notes by a central bank, thus allowing the sovereign to 'borrow' without needing to repay.[3] However, monetary seignorage refers to the sovereign revenue obtained through routine debt monetization, including expanding the money supply during GDP growth and meeting yearly inflation targets.[3]
Seigniorage is a convenient source of revenue for some governments. By providing the government with increased purchasing power at the expense of the public's purchasing power, it imposes what is metaphorically known as an inflation tax on the public.

It seems that the South Korean story was one where growth, not profits, was the goal; all in the hopes that it would create huge companies that would eventually be profitable.  This may explain why there was so much borrowing and telling the Bank of Korea to write off/make up for losses incurred by companies.  The Bank of Korea also had to make concessions to "private" banks to make up for a negative interest rate policy (late 1960s).  The whole system seemed to have to "keep growing" or otherwise the economy would have crashed.  I've been reading that they did have problems in this regard at times.

Thanks again for your explanations of macroeconomics!  I will be revisiting your and Pabitra's posts here often.  The definitions that some of these authors were using alone were tricky to unravel.  So, thank you.