Payments are increasingly being made with payment cards despite the fact that the cost of clearing a card payment usually exceeds the cost of transferring cash. We examine this puzzle through the lens of monetary theory. We consider the design of an optimal card-based payment system when cash is...

A fiat money system was introduced in the seventeenth century by a prominent public bank of the time, the Bank of Amsterdam. Employing data from the bank׳s archives, we show that bank money became a more attractive transactions medium following a 1683 policy change, which unbundled the bank׳s...

In this paper, the authors analyze statistical properties of the monetary base, M1, and M2 for the postwar U.S. data record. The authors are specifically interested in answering three policy-related questions. First, to what extent do these monetary aggregates contain information useful for...

Daily data on short-term interest rates are used to show how changes in Federal Reserve operating procedures have affected the term structure. Yield spreads were helpful in predicting short-term interest-rate movements during the nonborrowed reserves targeting period (1979-82) but not during the...

An environment is analyzed in which agents join clubs (payment networks) in order to facilitate trade. The networks compile personal identifying data (PID) so as to match transactors to transactions histories. Technological limitations cause the networks' data management practices to impact each...