Paper currency is deeply ingrained in the public’s image of government and country, and any attempt to change long-standing monetary conventions raises a host of complex issues. Despite huge and ongoing technological advances in electronic transactions technologies, it has remained surprisingly durable, even if its major uses seem to be buried in the world underground and illegal economy. There are many arguments for not disturbing the status quo, ranging from the importance of seigniorage revenues to civil liberties arguments.
Nevertheless, it is important to ask whether currency in paper form has outlived its usefulness. And although today’s crypto-currencies fall far short of being true currencies – for one thing their prices are simply too volatile – the underlying technologies may ultimately strengthen the menu of electronic payments options. With many central banks now near or at the zero interest rate bound, there are increasingly strong arguments for exploring how paper…
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