Understanding the Demand for Currency at Home and Abroad

Thomas Haasl, Anna Paulson and Sam Schulhofer-Wohl

Chicago Fed Letter, 2018, No 396

Abstract: Currency is traditionally the largest liability of a central bank and today accounts for 36% of the Federal Reserve?s liabilities, or $1.59 trillion.1 The Fed supplies currency to meet demand, so changes in the demand for currency will be an important determinant of how the Fed?s balance sheet evolves in the future. In this Chicago Fed Letter, we examine currency demand around the world and over time to learn about the range of possibilities for how U.S. currency demand might change. We then project currency demand over the next decade in several illustrative scenarios.

Keywords: Federal Reserve; payment systems; Currency (search for similar items in EconPapers)
Date: 2018
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DOI: 10.21033/cfl-2018-396

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