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On the Equivalence of Private and Public Money

Markus Brunnermeier () and Dirk Niepelt ()

No 13778, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a generic model of money and liquidity that identites sources of liquidity bubbles and seignorage rents. We provide sufficient conditions under which a swap of monies leaves the equilibrium allocation and price system unchanged. We apply the equivalence result to the "Chicago Plan," cryptocurrencies, the Indian de-monetization experiment, and Central Bank Digital Currency (CBDC). In particular, we show why CBDC need not undermine financial stability.

Keywords: CBDC; Chicago Plan; equivalence; Inside money; monetary system; money creation; outside money; sovereign money (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon and nep-pay
Date: 2019-06
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Journal Article: On the equivalence of private and public money (2019) Downloads
Working Paper: On the Equivalence of Private and Public Money (2019) Downloads
Working Paper: On the Equivalence of Private and Public Money (2019) Downloads
Working Paper: On the Equivalence of Private and Public Money (2019) Downloads
Working Paper: On the Equivalence of Private and Public Money (2019) Downloads
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