The Optimal Denomination of Currency: A Conjecture
Adrian E. Tschoegl
University of Pennsylvania - Management Department
Journal of Money, Credit And Banking, Vol. 29, No. 4, Part 1 (November 1997)
Telser (1995) and Sumner (1993) argue that the optimal system of denominations of currency would consist of a sequence of denominations that differed from each other by a factor of three. The fact is that today no currency follows the powers-of-three principle. I argue that existing currency systems are the result of an evolution over time that is subject to historical influences and social factors, especially the counting systems that societies use.
JEL Classification: E42
Date posted: November 6, 1997
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