International currency substitution and the apparent instability of velocity in some western European economies and in the United States

The purpose of this paper is to describe and interpret some empirical regularities in the movements of money's income velocity of circulation in major industrial countries. The results offer support for the "portfolio view", especially in the case of Germany. Since 1976, increases in the opportunity cost and the risk associated with holding dollars have argued strongly in favour of a shift in currency demand towards the Deutsche Mark.