We describe counterfeiting activity as the issuance of private money, one which is difficult to monitor. Our approach, which amends the basic random-matching model of money in mechanism design, allows a tractable welfare analysis of currency competition. We show that it is not efficient to...

In this comment, the author extends Cavalcanti and Nosal's (2010) framework to include the case of perfectly divisible money and unrestricted money holdings. He shows that when trade takes place in Walrasian markets, counterfeits circulate and the Friedman rule is still optimal