The need for issuing bigger denomination notes arises every 5 or 10 years in an economy like Taiwan where nominal income has been growing tremendously rapidly and where the public's currency holdings loom large in its total stock of money.' The authorities, however, have been reluctant to meet the needs of trade on the ground that the issuance of big-denomination notes is likely to be interpreted by the public as a sign of the overissue of currencies, and the mere expectation of inflation may drive the price level up even though the total stock of money is held constant. On the other hand, there was recently a shortage of 1-yuan coins in Taiwan. The authorities, in this case, responded very promptly and effectively in meeting the difficulty of coin shortages by issuing 1-yuan notes first and then by managing to provide an adequate amount of new coins. 2 Introduction of bigger denomination notes to relieve the public from the inconvenience of a higher price and unchanged maximum denomination implies a shift to a better denomination mix of money (currency). By the same token, mitigating the difficulty of coin shortages and providing an adequate amount of small-denomination currencies also imply an improvement in the currency size mixture. The purpose of this note is to analyze the macroeconomic effects of shifts in currency size mixture.