Optimal use of scale economies in the Federal Reserve’s currency infrastructure
AbstractCould the Federal Reserve lower its overall currency processing costs by reallocating its high-speed currency sorting volume? Given estimates of currency shipping costs and scale economies for high-speed sorting, the authors’ model minimizes costs by optimal distribution of sorting volumes across possible processing sites, while maintaining levels of service to depository institutions. Their key findings are that most of the potential savings can be achieved without closing any existing processing sites and that locating a new site in Phoenix would help lower System processing costs.
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Bibliographic InfoArticle provided by Federal Reserve Bank of Cleveland in its journal Economic Review.
Volume (Year): (2000)
Issue (Month): Q III ()
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- Paul W. Bauer, 1998. "Currency: time for change?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Oct.
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