Electronic Money and the Optimal Size of Monetary Unions

Paul De Grauwe and Claudia Costa Storti

No 3391, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this Paper we analyse whether the emergence of electronic money is likely to affect the optimal size of monetary unions. We distinguish between two possible future scenarios. In one scenario, electronic money supplants the existing publicly supported monetary networks (including the national payments systems). This scenario is likely to lead to larger monetary areas. It is also likely to lead to monetary instability. In a second scenario, electronic payments systems free ride on the existing national payments systems, which remain firmly in place. We argue that in this case also, the size of unified monetary areas is likely to increase.

JEL-codes: E42 F33 (search for similar items in EconPapers)
Date: 2002-05
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac and nep-mon
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