Where's the smart money?

Sampo Syreeni decoy at iki.fi
Mon Feb 11 18:09:01 EST 2002


On Mon, 11 Feb 2002, Trei, Peter wrote:

>That's the scenario which is (semi) worrying. As the tagged bills wear,
>some fraction of the RFID transponders will inevitably fail. When this
>happens, is the bill declared invalid?

I see no reason why sufficiently reliable RFID notes (say an MTBF in
average use of around 5; not technologically infeasible, yet around what
current print-only notes can take at max) could not be handled this way.
But if this is really such a problem, one would expect the issuer to be
able to invest a fair amount of money per bill in circulation into
verification methods in excess of what you'd typically see in a grocery
store -- a reasonable MTBF and enough circulation through the issuer would
lead to few notes getting into a bad shape to be passed this far up the
chain. Thus, failed notes could be replaced at a cost not much higher than
that incurred by routine check-ups, only with a greater delay.

Besides, there's a point in invalidating failed bills -- if this is not
done, where's the incentive for people to keep the stock in shape? A
monetary economy, by itself, *can* adapt to lost bills via deflation, and
bills going invalid is something nobody really wants to experience.
Also, it is likely that deflationary pressures arising out of economic
growth will completely drown out any effects lost notes might have on the
larger economy. The implication is, wear and tear of bills can be
accurately analyzed by treating them as a slowly devaluing physical good,
and the usual efficiency arguments apply.

Sampo Syreeni, aka decoy - mailto:decoy at iki.fi, tel:+358-50-5756111
student/math+cs/helsinki university, http://www.iki.fi/~decoy/front
openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2


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