Domestic euro users bear highest shoe leather costs, Bank of Italy paper finds

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Euro notes and coins

Euros circulating outside the eurozone could be imposing costs on foreign users of the banknotes, but the effect is small relative to the popularity of euros as a global currency, according to research published by the Bank of Italy.

Authors Alessandro Calza and Andrea Zaghini examine the effective 'tax' imposed by inflation in their paper, Shoe-leather costs in the euro area and the foreign demand for euro banknotes.

They note the tax on monetary balances implied by expected inflation is

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