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Demographics and the Demand for Currency

Geoffrey Dunbar

Staff Working Papers from Bank of Canada

Abstract: I use data from the Bank of Canada’s Bank Note Distribution System and exploit a natural experiment offered by the timing of Easter in the Gregorian calendar to analyze the effects of demographic change for currency demand. I find that the main drivers of low-denomination bank note demand are merchants. Merchants and the youngest age group, aged 15-24, are also a significant source of demand for twenty-dollar bank notes and for the total dollar value of withdrawals. In contrast, increases in the demographic age groups 25-54 and 55 plus tend to lower bank note withdrawals. Finally, I find no evidence that employment status is related to bank note demand, but that there is a difference between the bank note demand of men aged 15-24 and women aged 15-24: increases in the share of women aged 15-24 lead to increases in bank note demand.

Keywords: Bank notes; Econometric and statistical methods (search for similar items in EconPapers)
JEL-codes: C31 C36 E41 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014
New Economics Papers: this item is included in nep-mac
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Handle: RePEc:bca:bocawp:14-59