Cryptocurrencies, currency competition, and the impossible trinity

【Author】 Benigno, Pierpaolo; Schilling, Linda M.; Uhlig, Harald

【Source】JOURNAL OF INTERNATIONAL ECONOMICS

【影响因子】3.712

【Abstract】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 na-tional nominal interest rates must be equal and the exchange rate between the national cur-rencies 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.(c) 2022 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

【Keywords】Currency competition; Cryptocurrency; Impossible trinity; Exchange rates; Uncovered interest parity; Independent monetary policy

【发表时间】2022 MAY

【收录时间】2022-08-15

【文献类型】实证数据

【主题类别】

区块链治理-市场治理-数字货币