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Acknowledgements The work underlying this study was performed at the Econometric and Special Studies Department of the Nederlandsche Bank, where many contributed to it. I am indebted to all the statistical assistants of the department, especially to Anja Wouters and Rob Vet for their patient assistance in building up the data sets and analysing the survey data. Also Corina den Broeder rendered devoted and persistent research assistance with respect to the multicountry analysis during her stay at the Bank and I am grateful to Mike Clements of the Bank of England for his careful reading and commenting on that part. My collegues Peter van Els and Carlo Winder made some valuable suggestions. Liesbeth Klein and Coen Collee helped me avoid a number of errors in English, and thanks to the skilful efforts of Marietta Bakker, Gita Gajapersad and Carolien Verhoeven the text looks as it does. Above all, lowe a debt of gratitude to Martin Fase, one of the pioneers in this field of research, for his efforts and contribution to the improvement of this study. INTRODUCTION We seem to be well on the way to a cashless society. Paradoxically, however, the majority of the transactions are still paid in cash even in the most advanced economies. A second paradoxical observation is that, despite the primary and common character of currency, the economic theory on the use of and demand for cash is only rarely supported by empirical evidence.
List of contents
1 Theory and Empirical Evidence.- 1.1 Introduction.- 1.2 Macro-economic theory.- 1.3 Micro-economic theory.- 1.4 Empirical evidence from earlier studies.- 1.5 The demand for currency in the Netherlands 1955-1990.- 1.6 Conclusions.- 2 The Use of Money in a Micro-Economic Perspective.- 2.1 Introduction.- 2.2 The cash management of households.- 2.3 Manner of payment and use of currency.- 2.4 Conclusions.- 3 The Hoarding of Currency in the Netherlands.- 3.1 Introduction.- 3.2 Hoarding in a economic-theoretical setting.- 3.3 Estimation of hoarding.- 3.4 Cross-sectional evidence on the Fl. 1,000 note.- 3.5 Empirical implications for the demand for currency.- 3.6 Conclusions.- 4 Demand for Currency in an International Perspective.- 4.1 Introduction.- 4.2 Demand for currency by the public.- 4.3 Cash holdings of banks.- 4.4 The importance of hoarding.- 4.5 Share of coin in currency circulation.- 4.6 Number of notes and denominational structure.- 4.7 Conclusions.- 5 Epilogue.- 5.1 Summary.- 5.2 Conclusions.- Annex.- I Total payments, cash payments, velocity of currency circulation and economic key variables in a number of countries.- II Money, payments, transactions and economic key variables in the Netherlands 1955-1990.- III Composition of consumer expenditures in the Netherlands 1987.- IV Average note life and return rate by denomination in the Netherlands 1955-1990.- V Tabular summary of survey-estimation of sector demand for Fl. 1,000 notes.- VI Importance of ATMs, POS and credit cards in fifteen countries 1978-1989.- References.
