Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201967 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7741
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
When does a swap between private and public money leave the equilibrium allocation and price system unchanged? To answer this question, the paper sets up a generic model of money and liquidity which identifies sources of seignorage rents and liquidity bubbles. We derive sufficient conditions for equivalence and apply them in the context of the “Chicago Plan”, cryptocurrencies, the Indian de-monetization experiment, and Central Bank Digital Currency (CBDC). Our results imply that CBDC coupled with central bank pass-through funding need not imply a credit crunch nor undermine financial stability.
Subjects: 
money creation
monetary system
inside money
outside money
equivalence
CBDC
Chicago Plan
sovereign money
JEL: 
E40
E50
G10
H60
Document Type: 
Working Paper
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