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Competing digital monies

Author

Listed:
  • Jon Frost

    (BIS - Bank for International Settlements)

  • Jean-Charles Rochet

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Huyn Song Shin

    (BIS - Bank for International Settlements)

  • Marianne Verdier

    (CRED - Centre de Recherche en Economie et Droit - Université Paris-Panthéon-Assas)

Abstract

We compare three competing digital payment instruments: bank deposits, private stablecoins and central bank digital currencies (CBDCs). A simple theoretical model integrates the theory of two-sided markets and payment economics to assess the benefits of interoperability through a retail fast payment system organised by the central bank. We show an equivalence result between such a fast payment system and a retail CBDC. We find that both can improve financial integration and increase trade volume, but also tend to reduce the market shares of incumbent intermediaries.

Suggested Citation

  • Jon Frost & Jean-Charles Rochet & Huyn Song Shin & Marianne Verdier, 2025. "Competing digital monies," Working Papers hal-05081338, HAL.
    • Handle: RePEc:hal:wpaper:hal-05081338
    Note: View the original document on HAL open archive server: https://hal.science/hal-05081338v1
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    File URL: https://hal.science/hal-05081338v1/document
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