Costs and Benefits to Phasing Out Paper Currency

Kenneth Rogoff

No 20126, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries. For example, it constitutes roughly 10% of the US Federal Reserve's main monetary aggregate, M2. Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy. Second, its existence creates the artifact of the zero bound on the nominal interest rate. On the other hand, the enduring popularity of paper currency generates many benefits, including substantial seigniorage revenue. This paper explores some of the issues associated with phasing out paper currency, especially large-denomination notes.

JEL-codes: E41 E51 E52 (search for similar items in EconPapers)
Date: 2014-05
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

Published as Costs and Benefits to Phasing out Paper Currency , Kenneth Rogoff. in NBER Macroeconomics Annual 2014, Volume 29 , Parker and Woodford. 2015

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Related works:
Chapter: Costs and Benefits to Phasing out Paper Currency (2014)
Working Paper: Costs and Benefits to Phasing Out Paper Currency (2014)
Working Paper: Costs and Benefits to Phasing Out Paper Currency
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