The liabilities of private financial institutions (private money) have circulated historically. Current interest in private money has been spurred by advances in information technology that permit new types of payments arrangements. The author uses a search model of money to evaluate some of the...

A model of dynamic risk-sharing is constructed where agents meet pairwise and at random, and there is private information about endowments. Risk sharing is accomplished through dynamic contracts involving credit transactions and through monetary exchanges. A Friedman rule is optimal, and...