Should the central bank issue e-money?
Charles Kahn (),
Francisco Rivadeneyra and
Tsz-Nga Wong ()
No 2019-3, Working Papers from Federal Reserve Bank of St. Louis
Should a central bank take over the provision of e-money, a circulable electronic liability? We discuss how e-money technology changes the tradeoff between public and private provision, and the tradeoff between e-money and a central bank's existing liabilities like bank notes and reserves. The tradeoffs depend on i) the technological setup of the e-money system (as a token or an account; centralized or decentralized); ii) the potential improvement in the implementation and transmission of monetary policy; iii) the risks to safety and privacy from cyber attacks; and iv) the uncertain impact on banks' efficiency and financial stability. The most compelling argument for central banks to issue e-money is to address competition problems in the banking sector.
Keywords: central bank digital currencies; e-money; cryptocurrencies; token- and account- based payment payments (search for similar items in EconPapers)
JEL-codes: E42 E51 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon and nep-pay
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Working Paper: Should the Central Bank Issue E-money? (2018)
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