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Séries de pièces et billets socialement optimales: les coûts de production comptent-ils réellement ?

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  • Bouhdaoui, Yassine

    (Bank Al-Maghrib, Département de la Recherche)

Abstract

By adding denominations to their coin and banknote series central banks can increase the efficiency of cash payments. In practice, however, they opt for a denominational structure with a relatively low density. The literature holds that this is because of the production costs involved. Bouhdaoui and Van Hove (2017) test this proposition by introducing a per-denomination fixed cost into the matching model of Lee et al. (2005) and parameterize the model with data on the production of US dollar banknotes. This paper aims to test this assumption using production figures of Moroccan banknotes. The results confirm that central banks could increase the density of their currency systems beyond the observed level without the efficiency gains for transactors being dwarfed by the additional production costs for the central bank itself. Our finding shows that the explanation for the low density rather lies with computational and habituation costs incurred by consumers and merchants - and anticipated by central banks - that are not yet in any of the extant models.

Suggested Citation

  • Bouhdaoui, Yassine, 2018. "Séries de pièces et billets socialement optimales: les coûts de production comptent-ils réellement ?," Document de travail 2018-3, Bank Al-Maghrib, Département de la Recherche.
    • Handle: RePEc:ris:bkamdt:2018_003
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    Keywords

    Divisions monétaires; Billets de banque; Banque centrale; Coût social; modèle de search.;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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