Digital Currencies, Decentralized Ledgers, and the Future of Central Banking

20 Pages Posted: 9 May 2016

See all articles by Max Raskin

Max Raskin

New York University School of Law

David Yermack

New York University (NYU) - Stern School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: May 2016

Abstract

Central banking in an age of digital currencies is a fast-developing topic in monetary economics. Algorithmic digital currencies such as bitcoin appear to be viable competitors to central bank fiat currency, and their presence in the marketplace may pressure central banks to pursue tighter monetary policy. More interestingly, the blockchain technology behind digital currencies has the potential to improve central banks’ payment and clearing operations, and possibly to serve as a platform from which central banks might launch their own digital currencies. A sovereign digital currency could have profound implications for the banking system, narrowing the relationship between citizens and central banks and removing the need for the public to keep deposits in fractional reserve commercial banks. Debates over the wisdom of these policies have led to a revival of interest in classical monetary economics.

Suggested Citation

Raskin, Max and Yermack, David, Digital Currencies, Decentralized Ledgers, and the Future of Central Banking (May 2016). NBER Working Paper No. w22238. Available at SSRN: https://ssrn.com/abstract=2777326

Max Raskin (Contact Author)

New York University School of Law ( email )

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David Yermack

New York University (NYU) - Stern School of Business ( email )

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HOME PAGE: http://www.stern.nyu.edu/~dyermack

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