Money, privacy, anonymity: What do experiments tell us?
Donato Masciandaro () and
Journal of Financial Stability, 2021, vol. 56, issue C
The attention paid to the role of money as a store of privacy is increasing. In a monetary transaction, full privacy protection coincides with anonymity. In such situations, an empirical question arises: Is anonymity relevant in shaping the demand for money? We attempt to answer this question through laboratory experiments. The results show that anonymity matters and increases the overall appeal of a medium of payment, and that this effect is stronger for risk-prone individuals. Moreover, the trade-off between the two properties of liquidity and return is relatively high – to accept higher illiquidity risks, individuals require a more-than-proportional increase in the expected return. In general, the experiments suggest that the future attractiveness of alternative currencies depends on whether the three properties of money are mixed in a way that is consistent with the individual’s preferences.
Keywords: Money demand; Privacy; Anonymity; Cash; Private digital currencies; Central bank digital currencies; Experimental economics (search for similar items in EconPapers)
JEL-codes: C9 E4 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:56:y:2021:i:c:s1572308921000930
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