The "mattress problem" is solvable in paper money with a very simple mechanism: give paper notes an expiration date. Then you solve the negative interest rate problem by having the bank charge an "exchange fee" when you exchange them for new bills.
Then if you want to be a dick about it you make the "exchange fee" punitive to "encourage" people to not use paper money.
I don't think it's a problem either, but I also don't think that the existence of paper money is a barrier to negative interest rates. Because it's fiat, there's nothing stopping the issuer from voiding it.
The "mattress problem" is solvable in paper money with a very simple mechanism: give paper notes an expiration date. Then you solve the negative interest rate problem by having the bank charge an "exchange fee" when you exchange them for new bills.
Then if you want to be a dick about it you make the "exchange fee" punitive to "encourage" people to not use paper money.
I personally don’t believe the “mattress problem” is a problem- humans who save and prepare for their future SHOULD be rewarded.
By creating massive amounts of inflation - central banks encourage wastefulness and short term mentality
I don't think it's a problem either, but I also don't think that the existence of paper money is a barrier to negative interest rates. Because it's fiat, there's nothing stopping the issuer from voiding it.
Ah- I misunderstood.
They kind of do this already by regularly replacing paper money designs - due to “security”