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Currency Competition With Firms

Author

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  • Maxi Guennewig

Abstract

This paper analyses the consequences for monetary policy if firms issue money which generates seignorage revenues and information on consumers. I present a benchmark economy with a unique monetary equilibrium in which firms form digital currency areas if information rents are large. The central bank loses its autonomy and is forced to implement deflationary monetary policy. I extend the benchmark to show that the central bank may regain policy autonomy when firms form currency consortia with decision powers and claims on seignorage concentrated in the hands of one firm.

Suggested Citation

  • Maxi Guennewig, 2022. "Currency Competition With Firms," CRC TR 224 Discussion Paper Series crctr224_2022_378, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2022_378
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp378
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    Cited by:

    1. van Buggenum, Hugo & Gersbach, Hans & Zelzner, Sebastian, 2023. "Contagious Stablecoins?," CEPR Discussion Papers 18521, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Digital Currencies; Currency Competition; Seignorage Information; Facebook; Monetary Policy;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services

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