Seigniorage transfer payments in the context of the Common Monetary Area (CMA)

Jannie Rossouw

Article history:
Received: 18 April 2023
Accepted: 23 December 2023


This paper considers seigniorage and seigniorage transfer payments within the context of the Common Monetary Area (CMA), i.e., South Africa on the one hand, and eSwatini, Lesotho and Namibia on the other hand. Seigniorage generally makes reference to the income that accrues to the relevant issuer of currency in circulation (physical banknotes notes and coins in circulation), but the literature also elucidates other definitions. This aspect is considered in this paper. The CMA is a characteristic of Southern Africa that is often overlooked in the literature. The currencies of eSwatini, Lesotho and Namibia are pegged to the South African rand and rand transfers freely between the CMA partner countries. After assessing alternative definitions of seigniorage, this paper argues that, while the CMA-agreement provides for South Africa to pay seigniorage to eSwatini, Lesotho and Namibia, the seigniorage sharing agreement is too generous in favour of those countries, therefore including a component of development aid. It would be in South Africa’s best interest to report development aid in a transparent way, rather than to “hide” it as deemed or assumed seigniorage.

Banknotes, coin, currency, Common Monetary Area (CMA), eSwatini, Lesotho, Namibia, SA Reserve Bank, seigniorage, seigniorage transfer payments, South Africa

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