On the Equivalence of Private and Public Money

Brunnermeier, Markus K.; Niepelt, Dirk (2019). On the Equivalence of Private and Public Money. Journal of monetary economics, 106, pp. 27-41. Elsevier 10.1016/j.jmoneco.2019.07.004

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When does a swap between private and public money leave the equilibrium allocation and price system unchanged? To answer this question, the paper sets up a generic model of money and liquidity which identifies sources of seignorage rents and liquidity bubbles. We derive sufficient conditions for equivalence and apply them in the context of the “Chicago Plan”, cryptocurrencies, the Indian de-monetization experiment, and Central Bank Digital Currency (CBDC). Our results imply that CBDC coupled with central bank pass-through funding need not imply a credit crunch nor undermine financial stability.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Theory

UniBE Contributor:

Niepelt, Dirk

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0304-3932

Publisher:

Elsevier

Language:

English

Submitter:

Dino Collalti

Date Deposited:

31 Jan 2020 16:31

Last Modified:

22 Mar 2020 13:48

Publisher DOI:

10.1016/j.jmoneco.2019.07.004

BORIS DOI:

10.7892/boris.138641

URI:

https://boris.unibe.ch/id/eprint/138641

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