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March 3, 20260 citationsOpen Access

Physical vs Digital Currency. A Difference that Makes a Difference

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NANicola AmendolaLALuís AraújoLFLeo Ferraris

Key Points

  • Digital currency enables better tracking of monetary flows compared to physical currency, enhancing efficiency.
  • The intrinsic difference lies in the ability of digital currency for advanced record-keeping by monetary authorities.
  • By leveraging technological advancements, monetary authorities can optimize monetary policies and operations.
  • Understanding these differences can help in adapting to future financial systems that increasingly rely on digital currency.

Abstract

This paper compares digital and physical currency, focusing on a single intrinsic difference: digital, unlike physical currency, allows the monetary au- thority to trace the monetary flows in and out of the accounts. We show that this technological advance in record-keeping can be used by the monetary au- thority to improve upon physical currency and achieve efficiency in a wide range of circumstances.

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Cite This Study

Amendola et al. (2026) studied this question.

synapsesocial.com/papers/69a760f3c6e9836116a2e52bhttps://hdl.handle.net/2108/449143
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