Democratic (crypto-)currency issuance

Hans Gersbach

Digital Finance, 2022, vol. 4, issue 2, No 10, 169-185

Abstract: Abstract Can democratic currency issuance lead to welfare-optimal results/stable currency values? We explore (crypto-)currency issuance with flexible majority rules. With flexible majority rules, the vote-share needed to approve a particular currency issuance growth is increasing with this growth rate. By choosing suitable flexible majority rules, socially optimal growth rates can be achieved in simple settings. By adding a communication stage, in which agents can reveal their preferences for currency growth, the voting process can be ended in three rounds. With other procedures, one could even obtain the first-best solution in one voting round. Finally, we show that optimal money growth rates are realized if agents entering financial contracts anticipate ensuing inflation rates determined by these flexible majority rules.

Keywords: Digital currency; Central bank; Voting; Majority rule; Flexible majority rules (search for similar items in EconPapers)
JEL-codes: D72 E31 E42 E52 E58 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s42521-022-00051-z

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