Private Money

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Private Money

Author Info

Williamson, Stephen D

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Stephen D. Williamson

Abstract

A random matching environment is constructed where banks mitigate a mismatch between the timing of investment payoffs and when agents wish to consume. Claims on banks may serve as media of exchange, i.e. private money. Two problems can emerge with private money. First, there may exist welfare-dominated equilibria where banks hold low-return assets. Second, private media of exchange may be subject to lemons problems. In spite of these problems, the introduction of fiat money can decrease welfare, as this displaces private money and results in a crowding out of productive intermediation.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 31 (1999)
Issue (Month): 3 (August)
Pages: 469-91
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Handle: RePEc:mcb:jmoncb:v:31:y:1999:i:3:p:469-91

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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Other versions of this item:

Article
- Stephen D. Williamson, 1999. "Private money," Proceedings, Federal Reserve Bank of Cleveland, pages 469-499.
Paper
- Williamson, S.D., 1998. "Private Money," Working Papers 98-09, University of Iowa, Department of Economics.

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James Bullard & Bruce D. Smith, 2001. "The value of inside and outside money: expanded version," Working Papers 2001-011, Federal Reserve Bank of St. Louis. [Downloadable!]
Svetlana Boyarchenko & Sergei Levendorskii, 2004. "Inside and Outside Money, with an Application to the Russian Virtual Economy," Macroeconomics 0405009, EconWPA. [Downloadable!]
Nobuhiro Kiyotaki & John Moore, 2002. "Evil Is the Root of All Money," American Economic Review, American Economic Association, vol. 92(2), pages 62-66, May. [Downloadable!]
Wilfredo Toledo, 2006. "El dinero en los modelos macroeconómicos," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 8(15), pages 97-116, July-Dece. [Downloadable!]
David C. Mills, Jr., 2007. "Imperfect monitoring and the discounting of inside money," Finance and Economics Discussion Series 2007-58, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
Other versions:
- David C. Mills, Jr, 2008. "Imperfect Monitoring And The Discounting Of Inside Money," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 737-754, 08. [Downloadable!] (restricted)
James Bullard & Bruce D. Smith, 2001. "The value of inside and outside money," Working Papers 2000-027, Federal Reserve Bank of St. Louis. [Downloadable!]
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- Bullard, James & Smith, Bruce D., 2003. "The value of inside and outside money," Journal of Monetary Economics, Elsevier, vol. 50(2), pages 389-417, March. [Downloadable!] (restricted)
Edward S. Prescott & John A. Weinberg, 2000. "Incentives, communication, and payment instruments," Working Paper 00-11, Federal Reserve Bank of Richmond. [Downloadable!]
Other versions:
- Simpson Prescott, Edward & Weinberg, John A., 2003. "Incentives, communication, and payment instruments," Journal of Monetary Economics, Elsevier, vol. 50(2), pages 433-454, March. [Downloadable!] (restricted)
Cornelia Holthausen & Cyril Monnet, 2003. "Money and payments: a modern perspective," Working Paper Series 245, European Central Bank. [Downloadable!]
Costas Azariadis & James Bullard & Bruce Smith, 2000. "Private and public circulating liabilities," Working Papers 2000-012, Federal Reserve Bank of St. Louis. [Downloadable!]
Other versions:
- Azariadis, Costas & Bullard, James & Smith, Bruce D., 2001. "Private and Public Circulating Liabilities," Journal of Economic Theory, Elsevier, vol. 99(1-2), pages 59-116, July. [Downloadable!] (restricted)
Ed Nosal & Guillaume Rocheteau, 2006. "The economics of payments," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Feb. [Downloadable!]
Carolyn Sissoko, 2002. "Short-Term Credit: A Monetary Channel Linking Finance to Growth," Occidental Economics Working Papers 8, Occidental College, Department of Economics, revised Jun 2006. [Downloadable!]
Stephen D. Williamson, 2002. "Private money and counterfeiting," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 37-57. [Downloadable!]
Agapov Stanislav & Boyarchenko Svetlana & Levendorsky Sergey, 2003. "A Three-Sector Model of the Russian Virtual Economy," EERC Working Paper Series 02-06e, EERC Research Network, Russia and CIS. [Downloadable!]
Boel, Paola & Camera, Gabriele, 2004. "Efficient Monetary Allocations and the Illiquidity of Bonds," Purdue University Economics Working Papers 1171, Purdue University, Department of Economics. [Downloadable!]
Carolyn Sissoko, 2006. "An Idealized View of Financial Intermediation," Occidental Economics Working Papers 6, Occidental College, Department of Economics, revised Jun 2007. [Downloadable!]
Other versions:
- Sissoko, Carolyn, 2007. "An Idealized View of Financial Intermediation," Economics Discussion Papers 2007-16, Kiel Institute for the World Economy. [Downloadable!]
- Sissoko, Carolyn, 2007. "An Idealized View of Financial Intermediation," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 1(5), pages 1-29. [Downloadable!]
Leo Ferraris, 2003. "Money And Credit In Random Matching Models Of Money," Working Papers 59, Sapienza University of Rome, Department of Public Economics. [Downloadable!]
Bossone, Biagio, 2000. "What makes banks special ? a study of banking, finance, and economic development," Policy Research Working Paper Series 2408, The World Bank. [Downloadable!]
Antoine Martin & Stacey L. Schreft, 2003. "Currency competition : a partial vindication of Hayek," Research Working Paper RWP 03-04, Federal Reserve Bank of Kansas City. [Downloadable!]
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- Martin, Antoine & Schreft, Stacey L., 2006. "Currency competition: A partial vindication of Hayek," Journal of Monetary Economics, Elsevier, vol. 53(8), pages 2085-2111, November. [Downloadable!] (restricted)
Stephen Williamson, 2000. "The Research Agenda: Payment Systems and Private Money," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 2(1), November. [Downloadable!]

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This page was last updated on 2009-11-12.

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