This book is really two books. The first – which I found original and fascinating – is on the negative consequences of the widespread use of cash in modern economies. Although the point has been made in various places – few of them on the everyday reading list of most economists – the degree to which the volume of currency in circulation has increased although most people’s everyday use of it has declined, and the extent to which not only does the existence of paper currency feed illegal behaviour but that illegal behaviour probably now accounts for the majority of cash in circulation – has never as far as I know been so clearly made or with such a wide variety of supporting evidence. I completed that part totally convinced that advanced economies have many good reasons for phasing out the use of paper currencies as soon as possible. And the discussion – some of it deferred to the second book – of the feasibility of this is thoughtful and interesting.

       The second book is about the effect of the zero bound on nominal interest rates. Here Rogoff argues, explicitly and implicitly, that (1) it is desirable that economies should be able to implement negative nominal interest rates – implying real interest rates below minus 2% given the assumptions made about inflation targeting (2) that the principal constraint on the achievement of this is the possibility of storage of paper money (3) that for the forseeable future there is no possible alternative to a clearing system operated through electronic deposits at Central Banks – on which it is proposed to pay the (significantly, rather than at present nominally) negative interest rates (4) that this rate will continue to govern the overall structure of interest rates within the domestic economy, even in the face of these complex, indeed bizarre, policies.

       I am unconvinced that he has succeeded in establishing any of these propositions. The argument seems to owe too much to the conventional wisdom of Central Bankers, and too little either to reflection about the real economy or recognition of the complexity and flexibility of modern financial markets. I do not believe it to be the case that even in Switzerland there are not very many opportunities for physical investment whose expected return exceeds minus 2%. Then the real issue is not the inability to reduce the cost of capital to that level, but the other disfunctionalities, mostly with the financial system itself, which prevents these investments being undertakren. Srangely, Rogoff seems to suggest that if private sector innovation bypassed these established channels regulation should try to sustain the state monopoly of unit of account and clearing. But if the state monopoly is partly responsible for the problem in the first place….As Rogoff recognises, there are many ways of providing both clearing and unit of account other than via national Central Banks and if at the moment they have been mainly of interest to speculators and spivs – c f Bitcoin – that is because the respectable economy has not yet had real need of them. But create such need and it will be fulfilled.

       So I think it could be a much better book(or, less satisfactorily, a good book and another less good book) But this is to ask a lot and the conclusions might not be the same. So I think the realistic alternatives are to publish with minor revision or not at all. I would, given this choice, unhesitatingly publish. Rogoff’s reputation is high and this work contains much that is original and will be of wide interest. The fact that he has failed to persuade me is, in a sense, a tribute to his contribution is starting debate – it is well written and raise challenging questions.