Cash and COVID-19: The Effects of Lifting Containment Measures on Cash Demand and Use Staff discussion paper 2021-3 Heng Chen, Walter Engert, Kim Huynh, Gradon Nicholls, Julia Zhu Using Bank Note Distribution System data on the demand for cash up to September 2020, we find that demand was strong. This is true even though cash use for payments declined early in the pandemic. When mobility restrictions and lockdown measures were eased, cash use for payments increased sharply but remained less popular than electronic methods of payment. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54 Research Theme(s): Money and payments, Cash and bank notes, Retail payments
Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States Staff working paper 2021-8 Marie-Hélène Felt, Fumiko Hayashi, Joanna Stavins, Angelika Welte Although credit cards are more expensive for merchants to accept than cash or debit cards, merchants typically pass through their costs evenly to all customers. Along with consumer card rewards and banking fees, this creates cross-subsidies between payment methods. Because higher-income individuals tend to use credit cards more than those with lower incomes, our results indicate that these cross-subsidies might lead to regressive distributional effects. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D1, D12, D2, D23, D3, D31, E, E4, E42, G, G2, G21, L, L8, L81 Research Theme(s): Financial markets and funds management, Market structure, Money and payments, Retail payments
Using Payments Data to Nowcast Macroeconomic Variables During the Onset of COVID-19 Staff working paper 2021-2 James Chapman, Ajit Desai We use retail payment data in conjunction with machine learning techniques to predict the effects of COVID-19 on the Canadian economy in near-real time. Our model yields a significant increase in macroeconomic prediction accuracy over a linear benchmark model. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C53, C55, E, E3, E37, E4, E42, E5, E52 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting, Money and payments, Retail payments
Losing Contact: The Impact of Contactless Payments on Cash Usage Staff working paper 2020-56 Marie-Hélène Felt Contactless payment cards are a competitive alternative to cash. Using Canadian panel data from 2010 to 2017, this study investigates whether contactless credit cards are an important contributor to the decline in the transactional use of cash. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C3, C33, D, D1, D12, E, E4, E41 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Cash and bank notes, Retail payments
Safe Payments Staff working paper 2020-53 Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang, Yu Zhu In a cashless economy, would the private sector invest in the optimal level of safety in a deposit-based payment system? In general, because of externalities, the answer is no. While the private sector could over- or under-invest in safety, the government can use taxes or subsidies to correct private incentives. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E42, E5, E50, G, G2, G21 Research Theme(s): Money and payments, Digital assets and fintech, Payment and financial market infrastructures, Retail payments
Predicting Payment Migration in Canada Staff working paper 2020-37 Anneke Kosse, Zhentong Lu, Gabriel Xerri Developments are underway to replace Canada’s two core payment systems with three new systems. We use a discrete choice model to predict migration patterns of end-users and financial institutions for future systems and discuss their policy implications. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C3, E, E4, E42, G, G1, G2, G28 Research Theme(s): Money and payments, Payment and financial market infrastructures, Retail payments
Sample Calibration of the Online CFM Survey Technical report No. 118 Marie-Hélène Felt, David Laferrière The Canadian Financial Monitor (CFM) survey uses non-probability sampling for data collection, so selection bias is likely. We outline methods for obtaining survey weights and discuss the conditions necessary for these weights to eliminate selection bias. We obtain calibration weights for the 2018 and 2019 online CFM samples. Content Type(s): Staff research, Technical reports JEL Code(s): C, C8, C81, C83 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Cash and bank notes, Retail payments
Cash and COVID-19: The impact of the pandemic on demand for and use of cash Staff discussion paper 2020-6 Heng Chen, Walter Engert, Kim Huynh, Gradon Nicholls, Mitchell Nicholson, Julia Zhu Consumer spending declined significantly during the recent COVID-19 pandemic. This negative shock likely reduced spending across all methods of payment (cash, debit, credit, etc.). The mix of payment methods consumers use could also be affected. We study how the pandemic has influenced the demand for and use of cash. We also offer insights into the use of other payment methods, such as debit and credit cards. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54 Research Theme(s): Money and payments, Cash and bank notes, Retail payments
CBDC adoption and usage: some insights from field and laboratory experiments Staff analytical note 2020-12 Janet Hua Jiang This note discusses insights from historical launches of new payment methods and related laboratory experiments on the potential adoption and use of a central bank digital currency in the Canadian context. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C9, E, E4, E5, E58 Research Theme(s): Money and payments, Digital assets and fintech, Retail payments
Designing a CBDC for universal access Staff analytical note 2020-10 John Miedema, Cyrus Minwalla, Martine Warren, Dinesh Shah If the Bank of Canada issues a central bank digital currency, the technology should be designed for universal access. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E41, O, O3, O31 Research Theme(s): Money and payments, Cash and bank notes, Digital assets and fintech, Payment and financial market infrastructures, Retail payments