The Demand for Currency in Germany
39 Pages Posted: 14 Apr 2008
Date Written: May 2000
Abstract
In Germany. Like in most other developed countries, per capita holdings of bank-notes are far higher than pure transaction-balances. One possible explanation is that DM-bills, like US$-bills, are circulating in large quantities abroad. However, according to estimates presented by the Bundesbank, this explains only about a third of DM-balances. This paper summarizes existing studies for Germany and other countries. Which explore the demand for bank-notes and produces further estimates of the size of non-transaction balances. It is shown that high DM-amounts must be hoarded internally. Both, internal hoarding and foreign circulation, can reduce the informational content of narrow monetary aggregates.
Keywords: Money Demand, Currency Circulation, Hoarding, Monetary Policy
JEL Classification: E41, E52
Suggested Citation: Suggested Citation
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