[13] Moreover, due to their forward-looking nature and amplification through financial channels, the effect is frontloaded in DSGE models compared to other models, since households and firms more quickly react to the expected declines in future activity and inflation associated with monetary policy tightening.
As I noted earlier, people will still want to hold and use banknotes if they can’t be sure that the electronic system will be available when they need it. In our consumer payments survey in 2016, we asked people about why they held cash in places outside of their wallet.