Shadow Digital Money

James McAndrews and Lev Menand

MPRA Paper from University Library of Munich, Germany

Abstract: Promises by media platforms to provide digital transaction services will likely lead to a flood of new money. While these developments are potentially valuable, under current law the money created is unsound. It is not insured by the government, nor is it backed by safe assets. We should not yoke good technology to unsound money. Federal regulation is needed to guarantee safety and soundness, to restore monetary control to the Federal Reserve, and to prevent a race to the bottom between competing state regulatory regimes. With modest changes to the U.S. Code, innovation in payments will be just that—innovation in payments—and not also unsupervised and unsound money issuance.

Keywords: payments; digital money; regulation; fintech (search for similar items in EconPapers)
JEL-codes: G1 L0 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cba, nep-mon, nep-ore and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99137

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