1. bookVolume 9 (2020): Issue 2 (May 2020)
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
Open Access

The Cost of Using Cash and Checks in Uruguay

Published Online: 02 Jun 2020
Volume & Issue: Volume 9 (2020) - Issue 2 (May 2020)
Page range: 109 - 129
Received: 29 Jan 2019
Accepted: 14 Mar 2019
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
Abstract

The incorporation of new technologies to financial activities implies challenges and opportunities to financial authorities. They are reacting to the unavoidable trend towards digitalization of financial activities with the objective of preserving stable and efficient payment and financial systems. Uruguay, for instance, has promoted the use of electronic payment instruments and tested in the real economy a central bank digital currency called e-Peso. Digitalization of payment systems would reduce transaction costs by (partially) replacing less efficient means of payment, e.g. paper-cash and checks. In this paper we find that the cost of using cash in Uruguay is approximately 0.61% of GDP. Interestingly, 98.1% of this cost is borne by the private sector: banks and retailers 77.1% and households 21.0%. The cost of using checks is equivalent to 0.04% of GDP. Overall, replacing paper-cash and checks by other (electronic) means of payment would imply a transaction cost reduction for the private sector of the equivalent of up to 0.65% of GDP.

Keywords

JEL Classification

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