An Analysis of the Seigniorage Revenues in the Monetization of Financial Deficit——Beginning with the general implication of seigniorage

Seigniorage is the income from the government issuing money.Generally,it can be accepted that the seigniorage is the balance of the issue cost and the face value of money.Under inflation,the real perchasing power of money declines,the government's real seigniorage revenues is less than its nominal.The debate about seigniorage is always connected with the monetization of financial deficit.China's current active fiscal policy greatly depends on increasing the quantity issued of national bonds,and financial deficit recurs.The seigniorage revenues the government gets in the monetization of financial deficit is restricted simultaneously by the following three factors:economic growth's demand for base money,real rate of economic growth,and the money demand elasticity to inflation and income.