Introducing New Forms of Digital Money: Evidence from the Laboratory

Gabriele Camera

Working Papers from Chapman University, Economic Science Institute

Abstract: Central banks may soon issue currencies that are entirely digital (CBDCs) and possibly interest-bearing. A strategic analytical framework is used to investigate this innovation in the laboratory, contrasting a traditional “plain†tokens baseline to treatments with “sophisticated†interest-bearing tokens. In the experiment, this theoretically beneficial innovation precluded the emergence of a stable monetary system, reducing trade and welfare. Similar problems emerged when sophisticated tokens complemented or replaced plain tokens. This evidence underscores the advantages of combining theoretical with experimental investigation to provide insights for payments systems innovation and policy design.

Keywords: digital currency; endogenous institutions; repeated games; CBDC (search for similar items in EconPapers)
JEL-codes: C70 C90 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban, nep-cba, nep-exp, nep-gth, nep-mon and nep-pay
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https://digitalcommons.chapman.edu/esi_working_papers/372/

Related works:
Journal Article: Introducing New Forms of Digital Money: Evidence from the Laboratory (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:22-11

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