IDEAS home Printed from https://ideas.repec.org/a/aea/apandp/v116y2026p439-445.html

What Drives Money Competition: Comparative Advantage in Payments versus Reserves

Author

Listed:
  • Itay Goldstein
  • Ming Yang
  • Yao Zeng

Abstract

We study competition between monies that provide separate payment and nonpayment (e.g., store-of-value) functions. Payment adoption is governed by comparative advantage across these two functions rather than by absolute payment superiority. A money that is too good as a store of value may circulate less even if it is technologically superior because agents prefer to hoard it. The model helps understand historical money competition and current debates over stablecoins and central bank digital currencies, showing that higher yields can weaken, rather than strengthen, the payment adoption of interest-bearing digital currencies and potentially allow traditional bank deposits to retain payment dominance.

Suggested Citation

  • Itay Goldstein & Ming Yang & Yao Zeng, 2026. "What Drives Money Competition: Comparative Advantage in Payments versus Reserves," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 439-445, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:439-445
    DOI: 10.1257/pandp.20261024
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pandp.20261024
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://www.aeaweb.org/articles/materials/25268
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/25269
    Download Restriction: no
    File URL: https://libkey.io/10.1257/pandp.20261024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:apandp:v:116:y:2026:p:439-445. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.