Immigration and large banknotes

Andreas M. Fischer

Issue
2010-17

Pages
52

JEL classification
E41, E69

Keywords
immigration, large banknotes, hoarding, money demand

Year
2010

Do immigrants have a higher demand for large denominated banknotes than natives? This micro study examines whether cash orders for CHF 1,000 notes, a banknote used for storage purposes, is concentrated in Swiss municipalities with a high foreign-to-native ratio. Controlling for a range of regional indicators across 251 Swiss municipalities, European immigrants in Switzerland are found to hoard less CHF 1,000 banknotes than natives. This result says that immigration reduces seigniorage (per person) as measured by currency orders. A 1% increase in the immigrant-to-native ratio is coincident with a reduction in currency orders by CHF 4,000. The dampening effect is attributed to specific traits linked to immigrants.