The Case for Reducing Cash in Advanced Countries, and India’s Demonetization



Kenneth S. Rogoff
Thomas D. Cabot Professor of Public Policy
Harvard University


Monday, March 13, 2017


4:00–5:00 p.m. PT


RAND Corporation
1776 Main Street
Santa Monica, CA


Today, there is roughly $1.5 trillion of U.S. paper currency in circulation—about 40 $100 bills for every American man, woman, and child. The vast bulk of it is unaccounted for. What is all that cash being used for? A large part is feeding tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of a massive global underground economy. Another downside of paper money is that it can paralyze monetary policy because central banks are unable to stimulate growth by cutting interest rates significantly below zero when there’s a fear investors might abandon treasury bills and stockpile cash.

Kenneth Rogoff discussed his plan for phasing out most paper money—while leaving small-denomination bills and coins in circulation indefinitely—and addressed the challenges such a transition would pose. He contrasted his plan with the rather extreme and very recent real-world case of India, where chaos and confusion ensued after Prime Minister Narendra Modi announced on November 8, 2016 that the two largest Indian bills, the five-hundred-rupee and thousand-rupee notes, would immediately be retired as legal tender.


Kenneth S. Rogoff, the Thomas D. Cabot Professor of Public Policy at Harvard University and former chief economist of the International Monetary Fund, is the coauthor of the New York Times bestseller This Time Is Different: Eight Centuries of Financial Folly (Princeton). He is also the coauthor of , the standard graduate textbook in the field. His new book, The Curse of Cash, argues the case for drastically scaling back the world’s paper currency supply. He appears frequently in the national media and writes a monthly newspaper column that is syndicated in more than fifty countries. He is also an international grandmaster of chess.

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