Banknote Printing At Modern Central Banking:Trends, Costs, And Efficiency
This paper examines trends in banknote printing during the period 2000-2005 for a crosssectionof 56 central banks. Because of the high increase in the demand for currency inrecent years, central banks have implemented new strategies to increase efficiency in theproduction of banknotes. Some of them, involve the private sector by means of differentmodalities (e.g. joint ventures, subsidiaries or purchase of banknotes from specializedcompanies), and the integration of banknote printing and cash processing in a singlecomplex (e.g. Portugal and Colombia). A cost function using a panel data model withrandom effects was estimated. It was identified that the denomination structure, the size ofbanknotes, and the production method used by central banks have a significant impact onproduction costs. Government printing was found to be the most costly method, whileprivate-sector involvement in the process substantially reduces production costs. Using anon-parametric efficient frontier model, it was found that most central banks have increasedits technical efficiency during the period, especially in central banks where the privatesectorhas involved. Computing a Malmquist index through distance functions it wasidentified that central banks have showed a moderate increase in its productivity, primarilydue to increases in efficiency and, in a lower proportion to technical change. In most of thecases, a positive change in efficiency is mainly the result of higher scale efficiency. Thiscould obey to high increase in demand for currency.
|Date of creation:||19 Dec 2007|
|Date of revision:|
|Contact details of provider:|| |
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.:
- Mauricio Hernández Monsalve & Munir A. Jalil Barney & Carlos Esteban Posada, 2006. "¿Por qué ha crecido tanto la cantidad de dinero?: teoría y Evidencia Internacional (1975-2002)," BORRADORES DE ECONOMIA 003821, BANCO DE LA REPÚBLICA.
- Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- David C. Wheelock & Paul W. Wilson, 1996.
"Technical progress, inefficiency and productivity change in U.S. banking, 1984-1993,"
1994-021, Federal Reserve Bank of St. Louis.
- Wheelock, David C & Wilson, Paul W, 1999. "Technical Progress, Inefficiency, and Productivity Change in U.S. Banking, 1984-1993," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(2), pages 212-34, May.
- José De Gregorio, 2003.
"Mucho Dinero y Poca Inflación: Chile y la Evidencia Internacional,"
Latin American Journal of Economics-formerly Cuadernos de Economía,
Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(121), pages 716-724.
- José De Gregorio, 2003. "Mucho Dinero y Poca Inflación: Chile y la Evidencia Internacional," Economic Policy Papers Central Bank of Chile 08, Central Bank of Chile.
- Allen N. Berger & Loretta J. Mester, 1997.
"Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions?,"
Center for Financial Institutions Working Papers
97-04, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Berger, Allen N. & Mester, Loretta J., 1997. "Inside the black box: What explains differences in the efficiencies of financial institutions?," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 895-947, July.
- Allen N. Berger & Loretta J. Mester, 1997. "Inside the black box: what explains differences in the efficiencies of financial institutions?," Finance and Economics Discussion Series 1997-10, Board of Governors of the Federal Reserve System (U.S.).
- Allen N. Berger & Loretta J. Mester, 1997. "Inside the black box: what explains differences in the efficiencies of financial institutions?," Working Papers 97-1, Federal Reserve Bank of Philadelphia.
- James Bohn & Diana Hancock & Paul Bauer, 2001. "Estimates of scale and cost efficiency for Federal Reserve currency operations," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 2-26.
- Loretta J. Mester, 2003. "Applying efficiency measurement techniques to central banks," Working Papers 03-13, Federal Reserve Bank of Philadelphia.
- Amemiya, Takeshi, 1978. "A Note on a Random Coefficients Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 793-96, October.
- Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
- Jorge Galán Camacho & Miguel Sarmiento Paipilla, .
"Staff, Functions, and Staff Costs at Central Banks: An International Comparison with a Labor-demand Model,"
Borradores de Economia
419, Banco de la Republica de Colombia.
- Jorge E. Galán Camacho & Miguel Sarmiento Paipilla, 2007. "Staff, Functions, and Staff Costs at Central Banks: an International Comparison with a Labor- Demand Model," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 131-179, July-Dece.
- Jorge Galán Camacho & Miguel Sarmiento, 2006. "Staff, Functions, and Staff Costs at Central Banks: An International Comparison with a Labor-demand Model," BORRADORES DE ECONOMIA 003524, BANCO DE LA REPÚBLICA.
- Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
- David C. Wheelock & Paul Wilson, 2004. "Trends in the efficiency of Federal Reserve check processing operations," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 7-20.
- Carlos A. Arango A., 2004.
"La Demanda De Especies Monetarias En Colombia: Estructura Y Pronóstico,"
BORRADORES DE ECONOMIA
002964, BANCO DE LA REPÚBLICA.
- Carlos A. Arango A. & Martha Misas A. & Juan Nicolás Hernández, . "La Demanda de Especies Monetarias en Colombia: Estructura y Pronóstico," Borradores de Economia 309, Banco de la Republica de Colombia.
- Jerry Mushin, 1998. "Modeling the currency issue," Atlantic Economic Journal, International Atlantic Economic Society, vol. 26(3), pages 252-258, September.
- Jeffrey M. Lacker, 1993. "Should we subsidize the use of currency?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 47-73.
When requesting a correction, please mention this item's handle: RePEc:col:000094:004393. 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: (Clorith Angélica Bahos Olivera)
If references are entirely missing, you can add them using this form.