<abstract xmlns="http://www.w3.org/1999/xhtml"><p>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.</p></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.

The Cost of Using Cash and Checks in Uruguay

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"The Cost of Using Cash and Checks in Uruguay"}

The incorporation of new technologies to financial activities implies challenges and opportunities to financial authorities. They are reacting to the...

The Cost of Using Cash and Checks in Uruguay

Published Online: Jun 02, 2020

Page range: 109 - 129

Received: Jan 29, 2019

Accepted: Mar 14, 2019

DOI: https://doi.org/10.2478/jcbtp-2020-0016

Keywords
payment system, cost of cash, cost of checks, electronic payments

© 2020 Marcelo Álvez et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The Cost of Using Cash and Checks in Uruguay

Published Online: Jun 02, 2020

Page range: 109 - 129

Received: Jan 29, 2019

Accepted: Mar 14, 2019

DOI: https://doi.org/10.2478/jcbtp-2020-0016

Keywordspayment system, cost of cash, cost of checks, electronic payments

© 2020 Marcelo Álvez et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
payment system, cost of cash, cost of checks, electronic payments