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

Emanuele Borgonovo, Stefano Caselli, Alessandra Cillo, Donato Masciandaro (donato.masciandaro@unibocconi.it) 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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