Dear Pat,
The two arms of the intermediation process are first the arbitrage 
process to settle the prices and secondly the seigniorage process to 
settle the correct kind of means of payment, including the 
introduction of money especially. I agree that the prevailing use of 
the term seigniorage does not refer to the action of the seigneur, 
but the fee he charges, specifically the difference between the face 
value and the intrinsic worth of the instrument that serves as money. 
Perhaps seigneurship would be a more acceptable term.

Apart from the term, the key problem is cognition. Despite Keynes, it 
seems that most people do not see that equilibrium of exchange 
requires  the presence of symmetry or reciprocity (which was called 
double coincidence in olden language).  The buyer and none but the 
buyer must pay the seller and the seller and none but the seller must 
get the payment. Under indirect exchange, the buyer is unable to pay 
with his real good because the seller wants some other kind of good. 
The solution is for the buyer to pay with money rather than with real 
good. However, the producer of a product cannot turn his own product 
into money, because his supplier refuses to take it in payment. Money 
must be issued by an outsider called seigneur (the banker). The 
seigneurship is a necessary part of the market equilibration process, 
especially since 99% of actual exchanges are indirect and hence must 
be done with money as the necessary means of payment. Without money, 
the invisible hand (of arbitrage alone) will be visibly broken.

Mohammad Gani