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The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies

Author

Listed:
  • Aleksander Berentsen
  • Fabian Schar

Abstract

We characterize various currencies according to their control structure, focusing on cryptocurrencies such as Bitcoin and government-issued fiat money. We then argue that there is a large unmet demand for a liquid asset that allows households and firms to save outside of the private financial sector.

Suggested Citation

  • Aleksander Berentsen & Fabian Schar, 2018. "The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies," Review, Federal Reserve Bank of St. Louis, vol. 100(2), pages 97-106.
  • Handle: RePEc:fip:fedlrv:00097
    DOI: 10.20955/r.2018.97-106
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    File URL: https://doi.org/10.20955/r.2018.97-106
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    References listed on IDEAS

    as
    1. Berentsen, Aleksander & Kraenzlin, Sébastien & Müller, Benjamin, 2018. "Exit strategies for monetary policy," Journal of Monetary Economics, Elsevier, vol. 99(C), pages 20-40.
    2. Aleksander Berentsen & Nicole Jonker & Malte Krueger & Harry Leinonen & Katharina Linsbauer & Nikos Passas & Fabian Schär & Friederich Schneider & Paolo Tasca & Jens Ulbrich, 2016. "Cash on Trial," SUERF Studies, SUERF - The European Money and Finance Forum, number 2016/1 edited by Christian Beer & Ernest Gnan & Urs W. Birchler.
    3. Aleksander Berentsen & Fabian Schar, 2018. "A Short Introduction to the World of Cryptocurrencies," Review, Federal Reserve Bank of St. Louis, vol. 100(1), pages 1-16.
    4. Aleksander Berentsen & Alessandro Marchesiani & Christopher Waller, 2014. "Floor Systems for Implementing Monetary Policy: Some Unpleasant Fiscal Arithmetic," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), pages 523-542, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jonathan Chiu & Mohammad Davoodalhosseini & Janet Hua Jiang & Yu Zhu, 2019. "Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment," Staff Working Papers 19-20, Bank of Canada.
    2. Donato Masciandaro, 2018. "Central Bank Digital Cash and Cryptocurrencies: Insights from a New Baumol–Friedman Demand for Money," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(4), pages 540-550, December.
    3. Christian Pfister, 2019. "Central Bank Digital Currency:One, Two or None?," Working papers 732, Banque de France.
    4. Dirk Niepelt, 2018. "Reserves For All? Central Bank Digital Currency, Deposits and their (Non)-Equivalence," Diskussionsschriften dp1813, Universitaet Bern, Departement Volkswirtschaft.
    5. Charles M. Kahn & Francisco Rivadeneyra & Tsz-Nga Wong, 2018. "Should the Central Bank Issue E-money?," Staff Working Papers 18-58, Bank of Canada.
    6. Emanuele Borgonovo & Stefano Caselli & Alessandra Cillo & Donato Masciandaro, 2018. "Between Cash, Deposit And Bitcoin: Would We Like A Central Bank Digital Currency? Money Demand And Experimental Economics," BAFFI CAREFIN Working Papers 1875, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    7. Dirk Niepelt, 2018. "Reserves for All? Central Bank Digital Currency, Deposits, and their (Non)-Equivalence," CESifo Working Paper Series 7176, CESifo Group Munich.
    8. Belke, Ansgar & Beretta, Edoardo, 2019. "From cash to central bank digital currencies and cryptocurrencies: A balancing act between modernity and monetary stability," Ruhr Economic Papers 816, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Mohammad Davoodalhosseini, 2018. "Central Bank Digital Currency and Monetary Policy," Staff Working Papers 18-36, Bank of Canada.
    10. Emanuele Borgonovo & Stefano Caselli & Alessandra Cillo & Donato Masciandaro & Giovanno Rabitti, 2018. "Cryptocurrencies, central bank digital cash, traditional money: does privacy matter?," BAFFI CAREFIN Working Papers 1895, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    11. Sean Foley & Jonathan R Karlsen & Tālis J Putniņš, 2019. "Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?," Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1798-1853.
    12. Jonathan Chiu & Mohammad Davoodalhosseini & Janet Hua Jiang & Yu Zhu, 2019. "Central Bank Digital Currency and Banking," Staff Working Papers 19-20, Bank of Canada.
    13. Carlo Gola & Andrea Caponera, 2019. "Policy issues on crypto-assets," LIUC Papers in Economics 2019-7, Cattaneo University (LIUC).
    14. David Andolfatto, 2018. "Assessing the Impact of Central Bank Digital Currency on Private Banks," Working Papers 2018-25, Federal Reserve Bank of St. Louis, revised 06 Oct 2018.
    15. Svetlana V. Krivoruchko, 2018. "Cryptocurrencies and Approaches to Their Regulation," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 127006, Russia, issue 5, pages 120-129, October.

    More about this item

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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