Seigniorage is the revenue a government or central bank earns from the difference between the face value of money (notes and coins) and the cost of producing it.
When a central bank prints new money and puts it into circulation (like buying government bonds), the difference between the face value and production cost is seigniorage.
Governments can use seigniorage as a revenue source. However, excessive money printing leads to inflation — known as the 'inflation tax' — which erodes the purchasing power of all money holders.
In developing countries like Bangladesh, where tax collection is challenging, seigniorage can be an additional revenue source. But overreliance can fuel inflation.