TY  - JOUR
AU  - Rogoff, Kenneth S
TI  - Costs and Benefits to Phasing Out Paper Currency
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 20126
PY  - 2014
Y2  - May 2014
DO  - 10.3386/w20126
UR  - http://www.nber.org/papers/w20126
L1  - http://www.nber.org/papers/w20126.pdf
N1  - Author contact info:
Kenneth S. Rogoff
Thomas D Cabot Professor of Public Policy
Economics Department
Harvard University
Littauer Center 216
Cambridge, MA 02138-3001
Tel: 617-495-4022
Fax: 617/495-7730
E-Mail: krogoff@harvard.edu
M1  - published as Kenneth Rogoff. "Costs and Benefits to Phasing out Paper Currency," in Jonathan A. Parker and Michael Woodford, editors, "NBER Macroeconomics Annual 2014, Volume 29" University of Chicago Press (2015)

M3  - presented at "29th Annual Conference on Macroeconomics", April 11-12, 2014
AB  - 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.
ER  -