The End of Paper Money:Developing an illustrative model of a future world with a digital dual currency regime
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2021-08-13
Language
en
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Abstract
The sudden rise of cryptocurrencies like Bitcoin and the plan by Facebook's Libra
Association to introduce a global private cryptocurrency have triggered central banks to
introduce a digital version of their fiat currency. The Central Bank Digital Currencies
(CBDC) are going to reform our monetary systems and make them ready for the digital age.
The current study develops a theoretical model that explores a distant idea: a future world
where the CBDC and Bitcoin coexist in a monetary system with a stable exchange rate. The
study investigates the monetary policy implications of such a future stylized economy. The
results indicate that an increasing use of Bitcoin instead of the CBDC by the general public
could undermine the monetary policy.
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Faculteit der Managementwetenschappen