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Can cash hold its own? International comparisons: Theory and evidence

  • Sheri M. Markose

    ()

  • Yiing Jia Loke

A number of papers predict the imminent demise of currency use in transactions while some make a case for its continued use due to its distinctive feature of anonymity. Notwithstanding the latter, this paper shows on both theoretical and empirical grounds, that cash use is sustainable for the foreseeable future because of the cost competitiveness of ATM networked cash to the consumer relative to electronic POS card substitutes. Indeed, since the mid-1990s, Finland, Canada and France which are countries in the vanguard of EFTPOS development, have experienced a resurgence of ATM cash use as measured by its expenditure share.

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File URL: http://www.essex.ac.uk/economics/discussion-papers/papers-text/dp536.pdf
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Paper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 536.

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Date of creation: 09 Apr 2002
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Handle: RePEc:esx:essedp:536
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  1. Sheri M. Markose & Yiing Jia Loke, 2000. "Changing trends in payment systems for selected G10 and EU countries 1990-1998," Economics Discussion Papers 508, University of Essex, Department of Economics.
  2. Berentsen, Aleksander, 1997. "Monetary policy implications of digital money," MPRA Paper 37392, University Library of Munich, Germany.
  3. Stacey L. Schreft & Bruce D. Smith, 1997. "The evolution of cash transactions: some implications for monetary policy," Financial Services working paper 97-04, Federal Reserve Bank of Cleveland.
  4. Woodford, M., 1997. "Doing Without Money: Controlling Inflation in a Post-Monetary World," Papers 632, Stockholm - International Economic Studies.
  5. Sheri M. Markose & Yiing Jia Loke, 2003. "Network Effects On Cash-Card Substitution In Transactions And Low Interest Rate Regimes," Economic Journal, Royal Economic Society, vol. 113(487), pages 456-476, 04.
  6. Ireland, Peter N., 1994. "Economic growth, financial evolution, and the long-run behavior of velocity," Journal of Economic Dynamics and Control, Elsevier, vol. 18(3-4), pages 815-848.
  7. Mervyn King, 1999. "Challenges for monetary policy : new and old," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 11-57.
  8. Benjamin M. Friedman, 1999. "The Future of Monetary Policy: The Central Bank as an Army With Only a Signal Corps," NBER Working Papers 7420, National Bureau of Economic Research, Inc.
  9. 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.
  10. Dutta, Jayasri & Weale, Martin, 2001. "Consumption and the Means of Payment: An Empirical Analysis for the United Kingdom," Economica, London School of Economics and Political Science, vol. 68(271), pages 293-316, August.
  11. Caskey, John P & St Laurent, Simon, 1994. "The Susan B. Anthony Dollar and the Theory of Coin/Note Substitutions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(3), pages 495-510, August.
  12. Friedman, Benjamin M, 1999. "The Future of Monetary Policy: The Central Bank as an Army with Only a Signal Corps?," International Finance, Wiley Blackwell, vol. 2(3), pages 321-38, November.
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