The Macroeconomics of De-Cashing

Alexei Kireyev ()

No 2017/071, IMF Working Papers from International Monetary Fund

Abstract: The paper presents a simple framework for the analysis of the macroeconomic implications of de-cashing. Defined as replacing paper currency with convertible deposits, de-cashing would affect all key macroeconomic sectors. The overall macreconomic impact of de-cashing would depend on the balance of growth-enhancing and growth-constraining factors. Starting from a traditional saving-investment balance, the paper develops a four-sector macroeconomic framework. It is purely illustrative and is designed to provide a roadmap for a systematic evaluation of de-cashing. The framework is disaggregated into the real, fiscal, monetary, and external sectors and potential implications of de-cashing are then identified in each sector. Finally, the paper draws a balance on possible positive and negative macroeconomic implications of de-cashing, and proposes policies capable of augmenting its economic and social benefits, while reducing potential costs.

Keywords: WP; transferable deposit; interest rate; bank money; cash transaction; cash; currency; demonetization; balance of payments; unit of account; currency demand; surrogate currency; eliminated currency printing; monetary value; Currencies; Digital currencies; Current account; Monetary base; Global (search for similar items in EconPapers)
Pages: 26
Date: 2017-03-27
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Citations: View citations in EconPapers (3)

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