National Money of Account, with a Second National Money or Local Monies as Means of Payment: A Way of Finessing the Zero Interest Rate Bound

Stephen J. Davies
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Stephen J. Davies: Kobe University

Kobe Economic & Business Review, 2005, vol. 49, 69-91

Abstract: This paper shows how negative interest rates can be implemented \ at much less cost than under alternative proposals \ by separation of the account and means of payment roles of money \ i.e. by having these roles performed by different moneys. Such separation has been far from unusual in history, however unnatural it may seem to those whose experience is of model non-separated monetary systems. One possibility discussed is that the means of payment role of cash could be provided by local currencies rather than a national currency.

Keywords: Negative interest rates; Money of account; Local currencies (search for similar items in EconPapers)
JEL-codes: B59 E31 E42 E43 E50 E52 E59 (search for similar items in EconPapers)
Date: 2005
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