William Hummel_

Who Benefits from Seigniorage?

The 6% interest payment applies to what the bank paid for the stock it must hold. For example a bank with total assets of $12 billion should have a net worth of about $1 billion. It would pay in 3% of $1 billion ($30 million) for the stock. That means the bank would receive 6% on $30 million per year ($1.8 million) from its Federal Reserve bank. That's only .015% of its assets. Banks typically earn about 1% on assets.

The money to pay the interest comes from the Fed itself, which simply credits the bank's account at the Fed with a deposit of that amount.



On Dec 28 11:27 PM pbf123 wrote:

> But where is the 6% generated? 6% on the amount of money they have, even just 3% is a large amount.