Download This PaperOn the Equivalence of Private and Public Money
30 Pages Posted: 28 May 2019 Last revised: 17 Mar 2023
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On the Equivalence of Private and Public Money
On the Equivalence of Private and Public Money
On the Equivalence of Private and Public Money
Date Written: May 2019
Abstract
We develop a generic model of money and liquidity that identifies sources of liquidity bubbles and seignorage rents. We provide sufficient conditions under which a swap of monies leaves the equilibrium allocation and price system unchanged. We apply the equivalence result to the "Chicago Plan,'' cryptocurrencies, the Indian de-monetization experiment, and Central Bank Digital Currency (CBDC). In particular, we show why CBDC need not undermine financial stability.
Suggested Citation: Suggested Citation
Markus Konrad Brunnermeier (Contact Author)
Princeton University - Department of Economics ( email )
Bendheim Center for Finance
Princeton, NJ
United States
609-258-4050 (Phone)
609-258-0771 (Fax)
HOME PAGE: http://www.princeton.edu/¡markus