The paper discusses the policy problems of a project aimed at substituting several national currencies with one single currency. While these problems are of general interest, the analysis is motivated by the plan for Economic and Monetary Union among the members of the European Community. The...

Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries. For example, it constitutes roughly 10% of the US Federal Reserve's main monetary aggregate, M2. Yet, it has important drawbacks. First, it can help...