TY  - UNPD
A1  - Rösl, Gerhard
A1  - Seitz, Franz
A1  - Tödter, Karl-Heinz
T1  - Doing away with cash? The welfare costs of abolishing cash
T2  - Working paper series / Institute for Monetary and Financial Stability ; 112
N2  - To broaden the scope of monetary policy, cash abolishment is often suggested as a means of breaking through the zero lower bound. However, practically nothing is said about the welfare costs of such a proposal. Rösl, Seitz and Tödter argue that the welfare costs of bypassing the zero lower bound can be analyzed analytically and empirically by assuming negative interest rates on cash holdings. They gauge the welfare effects of abolishing cash, both, for the euro area and for Germany.
Their findings suggest that the welfare losses of negative interest rates incurred by money holders are large, notably if implemented in the current low interest rate environment. Imposing a negative interest rate of 3 percentage points on cash holdings and reducing the interest on all assets included in M3 creates a deadweight loss of € 62bn for the euro area and of €18bn for Germany. Therefore, the authors argue that cash abolishment or negative interest rates on cash to break through the zero lower bound at any price can hardly be a meaningful policy goal.
T3  - Working paper series / Institute for Monetary and Financial Stability - 112 
Y1  - 2017
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/43158
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-431588
IS  - April 2017
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -