Digital Cash: Principles & Practical Steps

24 Pages Posted: 23 Jan 2019 Last revised: 22 Jul 2022

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Andrew T. Levin

Dartmouth College - Department of Economics

Date Written: January 2019

Abstract

If the global economy encounters another severe adverse shock in coming years, will major central banks be able to provide sufficient monetary stimulus to preserve price stability and foster economic recovery? Our empirical analysis indicates that the Federal Reserve’s QE3 program was not an effective form of monetary stimulus and that unconventional monetary policies undertaken in the Eurozone and in Japan have been similarly limited in impact. We then consider how digital cash could bolster the effectiveness of monetary policy, and we characterize some potential steps for implementing digital cash via public-private partnerships between the central bank and supervised financial institutions. Our analysis indicates that digital cash could significantly enhance the stability of the financial system.

Suggested Citation

Bordo, Michael D. and Levin, Andrew T., Digital Cash: Principles & Practical Steps (January 2019). NBER Working Paper No. w25455, Available at SSRN: https://ssrn.com/abstract=3319678

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrew T. Levin

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

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