Coexistence of Cryptocurrencies and Central Bank Issued Fiat Currencies - A Systematic Literature Review

Abstract

Since the amount of simultaneously circulating cryptocurrencies is increasing rapidly worldwide, this study aims to question the effects on competition between privately issued cryptocurrencies and central bank issued fiat currencies by postulating a coexistence theory despite extreme scenarios. This systematic literature review provides a comprehensive, detailed overview and analysis of the relevant contributions on currency competition and coexistence and develops a theoretical framework of the main ideas and functions of cryptocurrencies as well as a brief summary of the currency approach. Furthermore, it categorises current findings in finance literature into major categories to introduce further research on coexistence. To proof a lack of research, we conducted a systematic literature review to outline previous research and highlight its gaps. We find that the literature reveals convergence towards the hypothesis of a lack of research in coexistence and competition concerning the inter-market situation of privately issued cryptocurrencies and central bank issued fiat currencies.

Keywords: digital currency, cryptocurrency, bitcoin, fiat currency, currency coexistence, parallel currency, currency competition, literature review

JEL Classification: E42, E51, G29