Is a secondary currency essential? On the welfare effects of a new currency

Arbeitspapier

The coexistence of cash and digital currencies constitutes a system of parallel currencies. This paper tackles the question whether a new (digital) currency is essential: Does a new currency allow for a better resource allocation even if a fully accepted currency is in circulation and still remains in circulation? Using the dual currency search model of Kiyotaki and Wright (1993), we show how the introduction of a secondary currency affects average utility. There is some scope for a welfare improvement, the welfare effect depends on differences in returns and costs, and, in particular, the fraction of cash traders who will be replaced by digital money traders.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 05-2022

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Demand for Money ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Money Supply; Credit; Money Multipliers
• Thema: digital money ; dual currency regime ; welfare comparison

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Fuchs, Max ; Michaelis, Jochen
• Ereignis: Veröffentlichung
• (wer): Philipps-University Marburg, School of Business and Economics
• (wo): Marburg
• (wann): 2022

Weitere Informationen

• Handle: http://hdl.handle.net/10419/254241
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ