Issue of national cryptocurrency. Sovereign revenues.

The sovereign is the highest person who has unlimited supreme power in the state for an indefinite period. Is there a threat to decentralized cryptocurrency in the issuance of national crypto-money?

Many articles have been written on our website regarding the release of the national cryptocurrency.

In particular: Switzerland, Great Britain, Sweden, Canada, China, Thailand, Iran, Estonia, Belarus and Venezuela - this is not a complete list of countries that, in pursuit of certain goals, released or are close to issuing cryptocurrencies that are strictly tied to the value of their fiat money or the value of commodity assets such as oil and gold. In each specific case, this national cryptocurrency solves or will only solve clearly defined problems. Back in March of this year, MasterCard expressed its readiness to work with national cryptocurrencies of central banks. 

The advantages of money on the blockchain are obvious, so IMF Director Kristen Laggard, at the ASEAN summit in Singapore, called on other countries to think about creating their own national cryptocurrency.

However, statements published in the New York Times statements Chairman of the Board of the Central Bank of Japan Masayoshi Amamiya questions the effectiveness of national cryptocurrencies. Approximately the same opinion was expressed by the research group of the Central Bank of Israel regarding the use of crypto-shekel.

In connection with the offensive of central banks and regulators, the competitive struggle between national and decentralized cryptocurrencies may intensify in the crypto world.

 Various kinds of experts are already beginning to rock the boat, making loud statements about the insolvency of Bitcoin and others decentralized altcoins, exposing the instability and inconvenience of their use as a means of payment.. And when the question concerns the anonymity of cryptocurrencies, then pocket experts are simply hysterical. This is what most irritates regulators around the world. But today is not about that. 

One of the ironclad arguments of modern gurus on economic issues is the thesis that the state does not want to lose its monopoly on issuing money. 

Why is this so important for the state? 

Seigniorage is one of the selfish answers to this question. If we turn to Wikipedia, we will get a primitive, but understandable definition:

Seigniorage is income received from the issue of money and appropriated by the issuer on the right of ownership. Below is the same simple example:

... if we assume that the cost of producing a hundred-dollar bill is 10 cents, then the seigniorage when issuing such a banknote will be 99 dollars 90 cents.

However, it turns out even lower that not everything is as simple as it seems at first glance. In fact, seigniorageis a phenomenon that has its origins in the era of commodity money. The part of the metal that was withdrawn in favor of the mint for minting coins was called brassage, and the difference between the value of the coins and the costs of their production was called pure seigniorage and belonged to the sovereign.  

By analogy, the concept of seigniorage was transferred to the modern economy for fiduciary money, when the issue of money is carried out by Central Banks, not only in paper, but also in electronic form. It is believed that, by definition, the difference between the costs of issuing money and its nominal value is seigniorage. 

From this moment on, confusion arose regarding the question: where does seigniorage go after the next issue of money? 

Why doesn’t the state become richer from their emissions? 

There are still heated debates and heated debates on this topic, often turning personal, between economists and experts of varying degrees of scholarship in matters of state economics.

However, while the debate continues, it turns out that the issue of money is a rather delicate issue and seigniorage completely depends on what moneyis put into circulation.. 

For example, if anniversary or commemorative coins are put into circulation, then their face value is not at all important. Seigniorage is calculated as the difference between the selling price and the cost. If ordinary coins are issued, then the difference between their face value and the cost of production is usually taken into account in the bank's expense and income accounts. When minting coins of small denominations, this difference is usually negative and goes into expenses. 

If commercial banks buy cash from the central bank, then seigniorage in this case is zero. And the issue of money to cover the deficit of the state budget expenditures has negative seigniorage.

The issue of money to purchase foreign currency as a foreign exchange reserve gives seigniorage to the state that places its national currency in the reserve of another state. 

Accounting for seigniorage is complicated by the fact that in accounting and management accounting there are no items of income and expense received through the issue of fiat money. Therefore, in real life, income from the issue, in the form as given in Wikipedia or interpreted by economist experts - does not exist!

Therefore, we can conclude that seigniorage is not such a cornerstone that can destroy decentralized cryptocurrencies and replace them with national ones crypto money.