Two banknotes and two coins of the New Taiwan Dollar are infrequently (if at all) used in Taiwan when people make cash payments. This note examines the effect of this behavior on the efficiency of cash payments. The results are compared with the Euro, where the two highest and two lowest tokens are also rarely used. We find for Taiwan that inefficiency increases with 60.7%, while for the Euro it is only 25.3%. The main reason is that two of the rarely used coins and notes in Taiwan are in the middle of the denominational range, whereas for the Euro, these tokens concern the ends of that range.

cash payments, efficiency, denomination range
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems (jel E42), Central Banks and Their Policies (jel E58)
hdl.handle.net/1765/123238
The Journal of Risk Finance
Department of Econometrics

Franses, Ph.H.B.F, & Welz, M. (2019). Cash use of the Taiwan dollar: Is it efficient?. The Journal of Risk Finance, 12(13), 1–6. Retrieved from http://hdl.handle.net/1765/123238