Cryptoliquidity: The Blockchain and Monetary Stability

42 Pages Posted: 31 Jul 2018

See all articles by James Caton

James Caton

North Dakota State University - Department of Agribusiness and Applied Economics; American Institute for Economic Research; North Dakota State University - NDSU Center for the Study of Public Choice and Private Enterprise

Date Written: July 11, 2018

Abstract

The development of blockchain and cryptocurrency may alleviate the economic strain associated with recession. Economic recessions tend to be aggregate demand driven, meaning that they are caused by fluctuations in the supply of or demand for money. Holding monetary policy as solution assumes that stability must arise from outside of the economic system. Under a policy regime that allows innovations in blockchain to develop, blockchain technology may promote a money supply that is responsive to changes in demand to hold money. This work suggests that cryptocurrencies present an opportunity to profitably implement rules that promote macroeconomic stability. In particular, cryptocurrency that is asset-backed may provide a means for cheaply attaining liquidity during a crisis.

Keywords: blockchain, cryptocurrency, endogenous money, liquidity, disequilibrium

Suggested Citation

Caton, James, Cryptoliquidity: The Blockchain and Monetary Stability (July 11, 2018). AIER Sound Money Project Working Paper No. 2018-15. Available at SSRN: https://ssrn.com/abstract=3211745 or http://dx.doi.org/10.2139/ssrn.3211745

James Caton (Contact Author)

North Dakota State University - Department of Agribusiness and Applied Economics ( email )

Fargo, ND 58105
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

North Dakota State University - NDSU Center for the Study of Public Choice and Private Enterprise

811 2nd Ave N.
Fargo, ND 58102
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
83
Abstract Views
619
rank
294,813
PlumX Metrics