Should the central bank issue e-money?

Charles Kahn, Francisco Rivadeneyra and Russell Wong

No 2019-3, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Should a central bank take over the provision of e-money, a circulable electronic liability? We discuss how e-money technology changes the tradeoff between public and private provision, and the tradeoff between e-money and a central bank's existing liabilities like bank notes and reserves. The tradeoffs depend on i) the technological setup of the e-money system (as a token or an account; centralized or decentralized); ii) the potential improvement in the implementation and transmission of monetary policy; iii) the risks to safety and privacy from cyber attacks; and iv) the uncertain impact on banks' efficiency and financial stability. The most compelling argument for central banks to issue e-money is to address competition problems in the banking sector.

Keywords: central bank digital currencies; e-money; cryptocurrencies; token- and account- based payment payments (search for similar items in EconPapers)
JEL-codes: E42 E51 E58 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2019-01-18
New Economics Papers: this item is included in nep-mac, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Should the Central Bank Issue E-money? (2018)
Journal Article: Should the central bank issue e-money?
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2019-003

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DOI: 10.20955/wp.2019.003

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