Monetary Policy Implications for the trade-off between a Private Digital Currency and a Central Bank Issued Digital Currency
This thesis looks into the consequences for monetary policy when traditional currency is (partly) replaced by e-currency. Both the consequences of a significant important private e-currency, such as Bitcoin, and a government controlled e-currency are discussed. Maintaining price and financial stability are the major objectives for central banks, which they achieve with their monetary policy. Therefore the risks for price and financial stability resulting from e-currency are investigated. The main finding is that a private e-currency reduces the effectiveness of monetary policy while government controlled e-currency increases the effectiveness via additional monetary instruments. The introduction of government controlled e-currency also leads to substantial economic growth as the cost of government financing is reduced, leading to a higher government budget.
Faculteit der Managementwetenschappen