Monetary Policy in a World of Cryptocurrencies

Pierpaolo Benigno

No 1905, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: Can currency competition affect central banks' control of interest rates and prices? Yes, it can. In a two-currency world, the growth rate of the cryptocurrency sets an upper bound on the nominal interest rate and the attainable inflation rate, if the government currency is to retain its role as medium of exchange. In a world of multiple competing currencies issued by profit-maximizing agents, the nominal interest rate and inflation are both determined by structural factors, and thus not subject to manipulation, a result hailed by the proponents of currency competition. The article also proposes some fixes for the classical problem of indeterminacy of exchange rates.

Pages: 33 pages
Date: 2019, Revised 2019-04
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Monetary Policy in a World of Cryptocurrencies (2023)
Working Paper: Monetary Policy in a World of Cryptocurrencies (2022)
Working Paper: Monetary Policy in a World of Cryptocurrencies (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:1905

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