Against the Tide—Currency Use among Latin American Immigrants in Chicago
Last Updated: 05/02/07
Like many other industrialized countries, the United States continues to transition from paper-based payments (cash and checks) to electronic payments. For society as a whole, the benefits of this shift may be substantial, since the marginal cost of an additional transaction on an electronic payment network is almost always considerably less than it would be on a paperbased network. For most households in the U.S. today, currency (cash) still represents a transactions vehicle, but one that is increasingly being upstaged by a variety of substitutes, such as debit cards. However, as the authors detail in this article, for many Latin American immigrants, currency represents not only their primary transactions vehicle, but may also represent their only savings vehicle. Indeed, in their study of Latin American immigrants in Chicago, they find evidence that the dramatic increase in the number of immigrants is supporting a growing demand for currency, notably in the $100 denomination. The authors argue that this trend has quite possibly contributed to the increase in domestic demand for currency since the late 1990s—an increase that is at odds with the generally accepted view that cash is on the way out.