Abstract
The simplest models of money and prices suggest that a central bank that issues money and is charged with maintaining price stability need never draw on fiscal resources. Indeed in a growing economy it will generate seigniorage that it can use to finance its own expenditures, turning over the excess to the treasury. But many deeper models that attempt to explain why money is valued imply that the fact that central bank money is valued at all is a happy accident. It is not an accident, but understanding why it is not requires recognizing the connections between fiscal and monetary policy. This recognition is only slowly emerging in the institutional framework of the EMU.
