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September/October 1996, 
Vol. 78, No. 5
Posted 1996-09-01

Price Stability and the Efficiency of the Retail Payments System

by William R. Emmons

Two of the Federal Reserve’s most important policy mandates are to foster price stability and to oversee the integrity and efficiency of the payments system. Although these policy goals are seldom discussed together, the author illustrates how price stability could enhance the efficiency of the payments system. He concludes that a monetary policy geared toward price stability would lower nominal interest rates and reduce the incentive to choose float-intensive and costly payment instruments.

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