If one takes account of the possibility of interest payments on bank reserves concept can be reformulated as follows In, BN denotes banknotes and coin in circulation and BR stands for bank reserves. BN and BR add up to M. The rate of interest paid on bank reserves is represented. As argued, a replacement of banknotes and queue management system coin will lead to a decline in r BN and an equal increase. By focusing on the former term, our calculations provide an insight in the central bank revenues deriving from its monopoly of banknote issuance.

 

These are the revenues that central banks stand to lose if banknotes and coin disappear. The latter part of queue management system the equation represents the revenues stemming from the central bank's monopoly of bank reserve creation. In order to compensate for seignior age losses, central banks could in this area. This topic is discussed further in section and the operating expenses of central banks in a historical perspective It is often argued that the increased sophistication of the payments' system technology in the past decades has already led to a considerable decline in the volume of queue management events notes and coin in circulation in relative terms. Hence, this process is generally considered to be a prominent factor influencing the demand for liquid monetary claims.

Effects of the issuance

Electronic money can be considered a new factor in this ongoing process. In subsection., we verify whether this impression is true. We present some comparative and tentative estimates queue management system of the evolution of currency and seignior age since for the G countries. This analysis could provide useful insights for assessing the potential of electronic money on seignior age. Before turning to the empiric, it should be stressed that the estimates for central bank revenues as well as expenditures are traditionally surrounded by some uncertainty.

computations are thus queue management system

This holds in particular for the operational expenditures of central banks due to difficulties in collecting uniformly defined figures see subsection. Like most previous studies, the based on a number of simplifying assumptions. We shall also confine ourselves to extracting general trends, since differences between individual countries are often attributable to many country specific factors. As regards currency, we have used end of year data queue management system included in the or published in the annual reports of central banks. For the sake of comparability, we have added the amounts of notes and coin outstanding, although we are aware queue management events of the fact that coin and some small denomination banknotes may be issued directly by the Treasury in some countries.

 

Chart displays the development of currency relative to nominal GDP since. [chart not available] Some interesting things emerge from this picture. First, the ratios do not move in the same direction. Since the early s, six countries experienced a gradual decline in notes and coin in circulation relative to GDP queue management events Belgium, France, Italy, Sweden, Switzerland, and the UK. In this respect, it is interesting to note that, since, the amount of currency in circulation in absolute terms has not dropped in any of the G countries.