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Understanding the Demand for Currency at Home and Abroad

Author

Listed:
  • Thomas Haasl
  • Anna L. Paulson
  • Sam Schulhofer-Wohl

Abstract

Currency is traditionally the largest liability of a central bank and today accounts for 36% of the Federal Reserve?s liabilities, or $1.59 trillion.1 The Fed supplies currency to meet demand, so changes in the demand for currency will be an important determinant of how the Fed?s balance sheet evolves in the future. In this Chicago Fed Letter, we examine currency demand around the world and over time to learn about the range of possibilities for how U.S. currency demand might change. We then project currency demand over the next decade in several illustrative scenarios.

Suggested Citation

  • Thomas Haasl & Anna L. Paulson & Sam Schulhofer-Wohl, 2018. "Understanding the Demand for Currency at Home and Abroad," Chicago Fed Letter, Federal Reserve Bank of Chicago.
  • Handle: RePEc:fip:fedhle:00085
    DOI: 10.21033/cfl-2018-396
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    Keywords

    Federal Reserve; payment systems; Currency;

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