The optimal currency denomination structure : a case of Thailand
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2011
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2554
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eng
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xii, 182 leaves : ill. ; 30 cm.
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
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National Institute of Development Administration. Library and Information Center
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Pat Pattanarangsun (2011). The optimal currency denomination structure : a case of Thailand. Retrieved from: http://repository.nida.ac.th/handle/662723737/608.
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The optimal currency denomination structure : a case of Thailand
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Abstract
Payment system nowadays areencouraged to move toward electronic payments (epayments), which are expected to be more efficientwith low cost and high convenience for making payment. However, cash cannot be perfectly substituted by epayment and is still needed in society. Beside the promotion of policy towards epayment, cash denomination should beconsidered and restructured tobecompatible with the real demandespecially when there are various changes in circumstances such as epayment usage, price leveland social preferences. This research examine optimal currency denomination structure from the cost and cash payment efficiency perspectives,focusing on banknote. The study propose conceptual methodologytogether with empirical study and numericalanalysis for Thailand. The main components used to set up optimization problemare: i) banknote demand by denomination derived from characteristic model ii) cash payment efficiency based on the principle of least effort and Cramer‘s modeliii) the Metric model for controlling the boundary of currency denomination structureand iv) the projection of relevantexogenousfactors. Considering all components together, numerical solutions would be obtained from the simulationoptimization technique The analyses were done from static and dynamic views and with different purposes. The static analysis was for examining whether the current denomination structure is optimal, while the dynamic analysis was applied to find the optimal denomination structure with multi-period determination. The denomination restructuring is then forwardly planned for Thailand. The results show that the current banknote denomination structure in Thailand is notoptimalaccording to the presentapproach and the 20year anticipated plan will eliminate 50baht banknotes. Five years from now(2016), 200baht banknotes should be introduced into circulation. In 2021, 50 baht banknoteswillreenter the denominationsystem, together with a new 000baht banknotes. At the same time, 20baht banknotes should be replaced by 20baht coins. According tothis optimal plan, cost and cash payment efficiency would improve. This study could be used as a guideline for the Bank of Thailand with some finetuning, according to how policymakers weigh the significances between cost and efficiency. Finallythe conceptual methodology in thisresearch canbe applied to other areassuch as telecommunicationand energy products.
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Thesis (Ph.D. (Economics))--National Institute of Development Administration, 2011