seigniorage business definition

Case Study U.S. Mint officials announced in late 2006 they were planning to implement rules prohibiting the melting down of pennies and nickels. The statement followed several years of rapidly rising commodity prices that resulted in negative seigniorage for both coins. Pennies, comprised of 2.5% copper and 97.5% zinc, had a metal content value of 1.12¢ and an overall cost, including production expenses, of 1.73¢ each at the time of the announcement. Nickels, with 75% copper and 25% zinc content, had a metal value of 6.99¢ and an overall cost of 8.34¢ each. The mint was also planning to require that shipments of the two coins to foreign countries be capped at $100 worth of coins. The news resulted in some people calling for abolishing the penny and altering the content of the nickel, much as the government did in the 1960s when dimes and quarters had a high silver content.