Optimal use of scale economies in the Federal Reserveâ€™s currency infrastructure
Could 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 authorsâ€™ 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.
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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