On the equivalence of private and public money

By Markus K. Brunnermeier, Dirk Niepelt. Journal of Monetary Economics, 2019

259 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/64e80e34fc664d9d7d86bae35a398a164c1c3590

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Giovanni Dell'Ariccia
2. David Andolfatto
3. Frank Smets
4. Luc Laeven

In Finance

1. Giovanni Dell'Ariccia
2. David Andolfatto
3. Luc Laeven
4. Thorsten Beck
5. Frank Smets
6. Stijn Claessens

Citations in the corpus

• Assessing the Impact of Central Bank Digital Currency on Private Banks (2018, background): “Substituting (4) and (5) into the objective (1) permits us to express the entrepreneurial choice problem as,”
• Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies (2020, unknown): “Another area is the systemic implications of CBDCs and how to cope with them (Brunnermeier and Niepelt (2019), Fernández-Villaverde et al (2020), Kwon et al (2020), Carletti et al (2020)).”
• Designing Central Bank Digital Currencies (2019, background): “Andolfatto (2018) and Chiu et al. (2019) develop models where CBDC raises welfare by reducing banks’ deposit market power, while Brunnermeier and Niepelt (2019), Kim and Kwon (2019) and Miccoli (2019) model the relationship between banking panics and the availability of CBDC.9 In Keister and…”
• Should Central Banks Issue Digital Currency? (2019, unknown): “and we have  +1 =  for all  (13)”