Cryptocurrencies, central bank digital cash, traditional money: does privacy matter?

Emanuele Borgonovo, Stefano Caselli, Alessandra Cillo, Donato Masciandaro () and Giovanno Rabitti

No 1895, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: The aim of this paper is to analyze the demand of both traditional and new media of exchange – as cryptocurrencies and central bank digital currencies – proposing a novel specification of the demand for money. In this specification, the medium of payment (MOP) has three properties: the first two are the MOP’s standard functions as a medium of exchange and as a store of value, while the third is a novel function as a store of privacy (anonymity value). The proposed framework is tested using a laboratory experiment. Our results show that anonymity matters, but less of the other two properties; at the same time, the presence of anonymity increases the overall appeal of a MOP, particularly if the individuals are risk prone; given anonymity, the sacrifice ratio between liquidity risk and opportunity cost are relatively high.

Keywords: Money; Cryptocurrencies; Central bank Digital Currency; Cash; Baumol; Friedman; Experimental economics (search for similar items in EconPapers)
JEL-codes: B22 D72 E41 E42 E52 E58 G38 G41 K42 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2018
New Economics Papers: this item is included in nep-exp, nep-mac, nep-mon, nep-ore and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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