THE DEMAND FOR CURRENCY IN MALTA

  • Aaron George GRECH

Abstract

This article studies the demand for one particular component of the money stock, currency, in Malta in the
light of the existing theoretical and empirical frameworks. In particular, it argues that the commonly applied
analytical framework needs to be tweaked slightly for it to explain better the reasons underpinning the relatively
high currency demand in Malta compared with other euro area countries. In particular, the presence of a large
tourism sector is likely to be boosting demand beyond what one would expect. Similarly the presence of a
significant shadow economy appears to be exerting some influence on the magnitude of currency holdings. That
said, this study suggests that there is scope for a number of policies which could lead to lower demand for notes,
particularly measures to facilitate the use of electronic means of payment and efforts to discourage the shadow
economy.
Published
2016-10-20
How to Cite
GRECH, Aaron George . THE DEMAND FOR CURRENCY IN MALTA. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 5, n. 1, p. 49-55, oct. 2016. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/271>. Date accessed: 05 july 2022.
Section
Theoretical and Practical Research in the Economic Fields