The Connection between the Increase in Foreign Reserves around the Globe and the U.S Collection of Seignorage Revenue

Abstract

This paper sheds light on the large seignorage revenue collected by the U.S government resulting from the increase in dollar holding by foreign governments in their foreign reserves. In order to explore the connections between U.S seignorage revenue and other countries foreign reserves we estimated an equation linking between the foreign reserves of several foreign countries and the US monetary base. Our results show a strong connection between the foreign reserves of China, Japan and UK and the US monetary base.