The Option Value of Money*

Remo Isch-Taudien () and Cyril Monnet ()
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Remo Isch-Taudien: University of Bern and Study Center Gerzensee, https://www.szgerzensee.ch/people/people-detail/remo-isch-taudien
Cyril Monnet: University of Bern and Study Center Gerzensee, https://www.szgerzensee.ch/people/people-detail/cyril-monnet

No 26.02, Working Papers from Swiss National Bank, Study Center Gerzensee

Abstract: An intrinsically useless asset can have value not because it serves as a medium of exchange today, but because it could in the future— this is the option value of money. We characterize the private and social option values of cryptocurrency in a model with a possibly selfinterested government controlling the cash supply. The social value is ambiguous: negative because cryptocurrency raises the cost of holding cash, yet positive when it disciplines the government. Calibrating the model, we find households would forgo 0.10%-0.81% of consumption to live in an economy where Bitcoin carries option value.

Pages: 58 pages
Date: 2026-06
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