Monday, November 16, 2009

The international movement of euro coins

We know rather well how frequently bank notes change hands, simply by computing the velocity of money from the money supply and some aggregate measuring transactions (although not all are done with cash nowadays). But as they change hands, how much do they travel?

Franz Seitz, Dietrich Stoyan and Karl-Heinz Tödter follow € coins. Each country participating in the European Monetary Union issues its own coins, and they are valid currency everywhere. So they eventually cross borders as people themselves cross borders. They look at German €1 coins and find that they exit the country at a rate of 4 to 5% a year. And Germany is the largest participating country, so I find this to be a surprisingly large flow. In the long term they expect the proportion of German coins in Germany to be around 50%.

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