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Crowding Out in a Dual Currency Regime? Digital Versus Fiat Currency

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  • KiHoon Hong
  • Kyounghoon Park
  • Jongmin Yu

Abstract

In this article, we analyze a dual currency regime with fiat currency and digital currency and investigate potential crowding-out effects of fiat currency or digital currency under the framework of the traditional monetary economic model. We find that crowding out occurs only under extreme assumptions, i.e., extremely high costs associated with the use (medium of exchange and store of value) of one currency and extremely low costs associated with the use of the other currency.

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  • KiHoon Hong & Kyounghoon Park & Jongmin Yu, 2018. "Crowding Out in a Dual Currency Regime? Digital Versus Fiat Currency," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(11), pages 2495-2515, September.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:11:p:2495-2515
    DOI: 10.1080/1540496X.2018.1452732
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    3. Richard Senner & Didier Sornette, 2019. "The Holy Grail of Crypto Currencies: Ready to Replace Fiat Money?," Journal of Economic Issues, Taylor & Francis Journals, vol. 53(4), pages 966-1000, October.
    4. Amber Wadsworth, 2018. "What is digital currency?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 81, pages 1-14, April.
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    6. Yuting Tu & Xin Yan & Huan Wang, 2023. "Game Theory Analysis of Chinese DC/EP Loan and Internet Loan Models in the Context of Regulatory Goals," Sustainability, MDPI, vol. 15(9), pages 1-15, April.
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    11. Seungyoon Lee, 2020. "House Prices and Household Consumption in Korea," Working Papers 2020-11, Economic Research Institute, Bank of Korea.
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    More about this item

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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