EC223 Lecture Notes - Lecture 5: Barter, Giro, Fiat Money
Document Summary
Predictions of a cashless society have been around for decades. E-money might be more convenient and efficient than a payments system based on paper. Several factors work against the disappearance of the paper system: expensive to set up, privacy and security concerns. Use of e-money will likely still increase in the future. More than of currency held per person in canada is a surprisingly large number. Where are all these dollars and who is holding them: criminals, cash businesses, foreigners. Construct monetary aggregates using the concept of liquidity. M1: the narrowest definition is called m1+ M1+: m1++ includes non-chequable deposits at depository taking institutions. M2: currency + bank deposits + fixed-term deposits. M2: m2 + deposits at tmls and cucps. M2+: m2 + + certain retail debt instruments. M3: m2 + non-personal term deposits + foreign currency bank deposits. Does it matter which measure of money is considered: yes. Aggregates can move in different directions in the short-run.
