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Cryptocurrencies, Currency Competition, and the Impossible Trinity / Pierpaolo Benigno, Linda M. Schilling, Harald Uhlig.
- Format:
- Book
- Author/Creator:
- Benigno, Pierpaolo.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w26214.
- NBER working paper series no. w26214
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- We analyze a two-country economy with complete markets, featuring two national currencies as well as a global (crypto)currency. If the global currency is used in both countries, the national nominal interest rates must be equal and the exchange rate between the national currencies is a risk-adjusted martingale. Deviation from interest rate equality implies the risk of approaching the zero lower bound or the abandonment of the national currency. We call this result Crypto-Enforced Monetary Policy Synchronization (CEMPS). If the global currency is backed by interest-bearing assets, additional and tight restrictions on monetary policy arise. Thus, the classic Impossible Trinity becomes even less reconcilable.
- Notes:
- Print version record
- August 2019.
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