Alternative monies and the demand for media of exchange
Prepaid cards, cash cards, electronic purses, smart cards these are but a few of the elements inthe revolution now taking place in monetary systems around the world. At that movement's heart is the emergence of a new value transfer system where alternative monies are offered toconsumers through the miracle of electronics. There are many stories in the business press about the general enthusiasm for these new forms of money. According to the hyperbole from marketing reps from this side of the financial community, currency and demand deposits soon will be endangered species. Consumer acceptance is alleged to be high, and cost efficiency associated with the new technology is expected to be substantial. Yet, as Wenninger and Laster (1995) suggest, "to succeed, an electronic purse system will need to offer enough features of value to its three constituencies consumers, merchants, and issuers to induce them to bear the cost." Most arguments in favorof these media of exchange can be viewed as a reaction to the rising costs associated with current check clearing and on-line credit systems. Data are scare. However, the cost advantages to the banking system of a movement from paper check to debit cards is alleged to be in the range of 50%. Off-line pre-paid cards are expected to reduce the cost of clearing transactions, handling cash and reducing fraud for merchants. To read the press, the consumer is equally enthusiastic. However, the economic rationale for this consumer enthusiasm is a bit unclear. Each application of the emerging electronic technology has been different in important ways. The universal receptivity to alternative monies may be more a good marketing ploy than good economics. To understand consumer reaction requires a careful analysis of the desirability of any one of these alternative technologies in terms of its impact on consumer cash management costs through changes in transaction patterns, average money holdings, and total transaction costs. Th
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): (1996)
Issue (Month): ()
|Contact details of provider:|| Postal: 20th Street and Constitution Avenue, NW, Washington, DC 20551|
Web page: http://www.federalreserve.gov/
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jacob A. Frenkel & Boyan Jovanovic, 1980.
"On Transactions and Precautionary Demand for Money,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 95(1), pages 25-43.
- Jacob A. Frenkel & Boyan Jovanovic, 1978. "On Transactions and Precautionary Demand For Money," NBER Working Papers 0288, National Bureau of Economic Research, Inc.
- Barro, Robert J, 1976. "Integral Constraints and Aggregation in an Inventory Model of Money Demand," Journal of Finance, American Finance Association, vol. 31(1), pages 77-88, March.
- Humphrey, David B & Pulley, Lawrence B & Vesala, Jukka M, 1996. "Cash, Paper, and Electronic Payments: A Cross-Country Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 914-939, November.
- John Wenninger & David S. Laster, 1995. "The electronic purse," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 1(Apr).
- David B. Humphrey & Lawrence B. Pulley & Jukka M. Vesala, 1996. "Cash, paper, and electronic payments: a cross-country analysis," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 914-941.
- Romer, David, 1987. "The monetary transmission mechanism in a general equilibrium version of the baumol-tobin model," Journal of Monetary Economics, Elsevier, vol. 20(1), pages 105-122, July.
- John P. Caskey & Gordon H. Sellon, 1994. "Is the debit card revolution finally here?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 79-95.
When requesting a correction, please mention this item's handle: RePEc:fip:fedgpr:y:1996:p:942-964. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kris Vajs)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.