Strategic Money and Credit Ledgers

Markus Brunnermeier and Jonathan Payne

No 31561, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies strategic decision making by a private currency ledger operator, which faces competition from public money and/or other ledgers. A monopoly ledger operator can incentivize contract enforcement across the financial sector by threatening exclusion, but it can also impose markups through its pricing power. Currency competition limits rent extraction, but also makes coordinated contract enforcement more fragile. The emergent market structure bundles the provision of ledger and platform trading technologies. Regulation to ensure platform cooperation on contract enforcement and competition on markup setting is effective so long as agents can easily switch between platforms.

JEL-codes: E4 E42 E5 E50 E59 F39 G21 G23 L10 L13 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-ban, nep-com, nep-fdg, nep-mic, nep-mon, nep-pay and nep-reg
Note: AP CF EFG IFM IO ME
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