The Surprising Recovery of Currency Usage

Jonathan Ashworth and Charles A.E. Goodhart
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Jonathan Ashworth: Independent Economist
Charles A.E. Goodhart: London School of Economics

International Journal of Central Banking, 2020, vol. 16, issue 3, 239-277

Abstract: Currency usage began a long trend decline in the decades after World War II. This was expected to continue, and even accelerate, owing to payment technology innovations. Surprisingly, however, such usage as a percentage of GDP stopped falling and has increased quite sharply in recent years in most countries, with Sweden the major outlier. We examine to what extent this may have been due to increasing interest elasticity, nearing the zero lower bound, and also to rising tax evasion, as indirect taxes rise. We also show how currency holdings increased temporarily as the financial crisis struck in 2008.

JEL-codes: E40 E49 E63 H26 N10 N20 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (30)

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Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2020:q:2:a:7

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