When do plastic bills lower the bill for the central bank? A model and estimates for the U.S

Yassine Bouhdaoui, D. Bounie and L. Van Hove

Journal of Policy Modeling, 2013, vol. 35, issue 1, 45-60

Abstract: We develop an analytical framework that allows central banks to assess whether changing the manufacturing material of their tokens would be beneficial. Applied to the case of the U.S., we find that a complete adoption of plastic notes would save the Fed $140 million per year but would entail a substantial migration cost in case of a “big bang”. On the level of individual denominations, we find that the $1 bill would be the most lucrative to replace and that the business case for the $100 bill is thin – suggesting that a partial adoption of polymer would make more sense.

Keywords: Central banks; Plastic banknotes; Production costs; Seigniorage (search for similar items in EconPapers)
JEL-codes: E4 E47 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:35:y:2013:i:1:p:45-60

DOI: 10.1016/j.jpolmod.2012.08.001

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