How Do Private Digital Currencies Affect Government Policy?
23 Pages Posted: 9 Sep 2019 Last revised: 20 Feb 2023
Date Written: September 2019
This paper provides a systematic evaluation of the different types of digital currencies. We express skepticism regarding centralized digital currencies and therefore focus our economic analysis on private digital currencies. Specifically, we highlight the potential for private digital currencies to improve welfare within an emerging market with a selfish government. In that setting, we demonstrate that a private digital currency not only improves citizen welfare but also encourages local investment and enhances government welfare.
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