Costs and Benefits to Phasing out Paper Currency

This paper explores the costs and benefits to phasing out paper currency, beginning with large-denomination notes, later extending to all but small coins and bills, and eventually those as well. It is hardly a simple issue; paper currency is deeply ingrained in the public's image of government and country, and any attempt to change long-standing monetary conventions raises a host of complex issues. The symbolic value of the euro, for example, as a flag for nascent European institutions, is hard to overstate. Nevertheless, it is important to ask whether currency in paper form has outlived its usefulness. Today, credit and debit cards are increasingly being used for even small transactions. And although today's cryptocurrencies fall far short of being true currencies -- for one thing their prices are simply too volatile -- the underlying technologies may ultimately strengthen the menu of electronic payments options.