Distributed Ledgers and the Governance of Money

Raphael Auer, Cyril Monnet and Hyun Song Shin

No 21.01, Working Papers from Swiss National Bank, Study Center Gerzensee

Abstract: Blockchain technology breathes new life into the classical analysis of money as a substitute for a ledger of all past transactions. While it involves updating the ledger through a decentralized consensus on the unique truth, the robustness of the equilibrium that supports this consensus depends on who has access to the ledger and how it can be updated. Using a global game analysis of an exchange economy with credit, we solve for the optimal ledger design that balances security, scalability and decentralization. When intertemporal incentives are strong, a centralized ledger is always optimal. Otherwise, decentralization may be optimal.

Pages: 70 pages
Date: 2021-11
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Distributed ledgers and the governance of money (2021)
Working Paper: Distributed Ledgers and the Governance of Money (2021)
Working Paper: Distributed Ledgers and the Governance of Money (2021)
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