Central Banking

ECB paper on the euro cash changeover

The ECB Working Paper "Rational inattention, inflation developments and perceptions after the euro cash changeover" uses the euro cash changeover to test theories of finite information-processing capacities on the side of consumers.

It argues that the denomination of prices in a new currency has increased the information-processing requirements for consumers by more than for sellers, a wedge that can lead to price increases. The size of the wedge should depend on the complexity of the currency

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