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The Demand For Currency In Malta

Author

Listed:
  • Aaron GRECH

    (Modelling and Research Department, Central Bank of Malta, Malta)

Abstract

This article studies the demand for one particular component of the money stock, currency, in Malta in the light of the existing theoretical and empirical frameworks. In particular, it argues that the commonly applied analytical framework needs to be tweaked slightly for it to explain better the reasons underpinning the relatively high currency demand in Malta compared with other euro area countries. In particular, the presence of a large tourism sector is likely to be boosting demand beyond what one would expect. Similarly the presence of a significant shadow economy appears to be exerting some influence on the magnitude of currency holdings. That said, this study suggests that there is scope for a number of policies which could lead to lower demand for notes, particularly measures to facilitate the use of electronic means of payment and efforts to discourage the shadow economy.

Suggested Citation

  • Aaron GRECH, 2014. "The Demand For Currency In Malta," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 5(1), pages 49-55.
    • Handle: RePEc:srs:jtpref:v:5:y:2014:i:1:p:49-55
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    Cited by:

    1. Aaron G Grech, "undated". "The evolution of the Maltese economy since independence," CBM Working Papers WP/05/2015, Central Bank of Malta.
    2. Reuben Ellul, 2017. "Correlation between Maltese and euro area sovereign bond yields," CBM Working Papers WP/03/2017, Central Bank of Malta.
    3. Aaron G. Grech (ed.), 2015. "The evolution of the Maltese Economy since Independence," CBM Ebooks, Central Bank of Malta, edition 1, number 02.

    More about this item

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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