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Can currency competition work?

Jesus Fernandez-Villaverde () and Daniel Sanches

Journal of Monetary Economics, 2019, vol. 106, issue C, 1-15

Abstract: Can competition among privately-issued fiat currencies work? Only sometimes and partially. To show this, we build a model of competition among privately-issued fiat currencies. A purely private arrangement fails to implement an efficient allocation, even though it can deliver price stability under certain technological conditions. Although currency competition creates problems for monetary policy, it is possible to design a policy rule that uniquely implements an efficient allocation.

Keywords: Private money; Currency competition; Cryptocurrencies (search for similar items in EconPapers)
JEL-codes: E40 E42 E52 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Can Currency Competition Work? (2016) Downloads
Working Paper: Can currency competition work? (2016) Downloads
Working Paper: Can Currency Competition Work? (2016) Downloads
Working Paper: Can Currency Competition Work? (2016) Downloads
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DOI: 10.1016/j.jmoneco.2019.07.003

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