So, I’ve been asked to have a look at a little paper:
In fact and practice, seigniorage is distributed unfairly and opaquely because most
money is created by commercial banks. Money in circulation (money stock) consists of
notes issued by central banks and deposits created by commercial banks. The quantity of
the latter far exceeds the former in all major countries. Therefore, a portion of seigniorage
is given to commercial banks as a hidden subsidy (Huber and Robertson, 2000).
The idea here is that we want to finance a universal income, and obviously, seigniorage, the profit from creating money, is a good place to get the finance. Sure, why not?
It’s just that the banks aren’t getting seigniorage by creating credit, only the central bank is from creating money. They’re not the same thing at all.
This is easy to test. Where is that seigniorage that the banks are receiving? If it’s anything like proportional to central bank profits from money making then it’s hundred of billions a year in an economy like the UK. As the Positive Money guys say in fact. But the banks don’t get hundreds of billions – that’s an order of magnitude larger than their profits for example.
So, the banks aren’t getting such seigniorage, so we cannot appropriate it by changing the system.