Costs and Benefits to Phasing Out Paper CurrencyKenneth S. Rogoff
NBER Working Paper No. 20126 Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries. For example, it constitutes roughly 10% of the US Federal Reserve's main monetary aggregate, M2. Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy. Second, its existence creates the artifact of the zero bound on the nominal interest rate. On the other hand, the enduring popularity of paper currency generates many benefits, including substantial seigniorage revenue. This paper explores some of the issues associated with phasing out paper currency, especially large-denomination notes.
Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): 10.3386/w20126 Published: Costs and Benefits to Phasing out Paper Currency, Kenneth Rogoff. in NBER Macroeconomics Annual 2014, Volume 29, Parker and Woodford. 2015 Users who downloaded this paper also downloaded* these: |
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