What implications do 21st century monetary innovations bring for holdings of central bank money and standards of value? Emerging technologies such as cybercash, e-cash, and smart cards can be expected to reduce demand for central bank money, but the theoretical framework for monetary policy has...

This paper proposes an analytic framework for the reliability assessment of the automated payments systems used by the Federal Reserve Banks. The failure/recovery behavior of the system currently in operation is modeled as a continuous-time Markov process with varying levels of detail, and the...

This paper uses a stochastic cost frontier to examine the scale economies, cost efficiencies, and technological change of three payments instruments--check, automated clearinghouse (ACH) transfers, and Fedwire processing--provided by the Federal Reserve over the period 1990-94. We find evidence...

Because the automated clearinghouse (ACH) has been found to have lower social costs than paper checks, the Federal Reserve has been promoting more widespread use of ACH by lowering ACH processing fees. In this paper we have obtained the first numerical estimates of ACH demand elasticities, a...

The reserve banks’ check collection service was designed in 1913 to serve as "glue," attaching the new central bank to the commercial and financial markets through member banks. Successful creation and operation of the Federal Reserve System was thought to be more likely if the reserve banks...

We propose a set of consistency conditions that frontier efficiency measures should meet to be most useful for regulatory analysis or other purposes. The efficiency estimates should be consistent in their efficiency levels, rankings, and identification of best and worst firms, consistent over...

This paper considers the implications of a decreasing demand for cash transactions under several monetary policy regimes. A policy of nominal-interest-rate targeting implies that a secular decline in the volume of cash transactions unambiguously leads to accelerating inflation. A policy of...