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Shadow Digital Money

Author

Listed:
  • McAndrews, James
  • Menand, lev

Abstract

Promises by media platforms to provide digital transaction services will likely lead to a flood of new money. While these developments are potentially valuable, under current law the money created is unsound. It is not insured by the government, nor is it backed by safe assets. We should not yoke good technology to unsound money. Federal regulation is needed to guarantee safety and soundness, to restore monetary control to the Federal Reserve, and to prevent a race to the bottom between competing state regulatory regimes. With modest changes to the U.S. Code, innovation in payments will be just that—innovation in payments—and not also unsupervised and unsound money issuance.

Suggested Citation

  • McAndrews, James & Menand, lev, 2020. "Shadow Digital Money," MPRA Paper 99137, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99137
    as

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    File URL: https://mpra.ub.uni-muenchen.de/99137/1/MPRA_paper_99137.pdf
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    References listed on IDEAS

    as
    1. Markus K. Brunnermeier & Harold James & Jean-Pierre Landau, 2019. "The Digitalization of Money," Working Papers 2019-13, Princeton University. Economics Department..
    2. Ricks, Morgan, 2016. "The Money Problem," University of Chicago Press Economics Books, University of Chicago Press, number 9780226330327, December.
    3. Brunnermeier, Markus K. & Niepelt, Dirk, 2019. "On the equivalence of private and public money," Journal of Monetary Economics, Elsevier, vol. 106(C), pages 27-41.
    4. Ben S. Bernanke, 2018. "The Real Effects of Disrupted Credit: Evidence from the Global Financial Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 251-342.
    5. Hockett, Robert C. & Library, Cornell, 2019. "Money's Past is Fintech's Future: Wildcat Crypto, the Digital Dollar, and Citizen Central Banking," LawArXiv s9jb6, Center for Open Science.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    payments; digital money; regulation; fintech;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • L0 - Industrial Organization - - General

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