The rise of cryptocurrencies over the past decade has promised to challenge the dominance of fiat money systems and reshape monetary policy. However, recent developments, including market volatility and the collapse of key exchanges like FTX, have eroded public trust, raising skepticism of a...

This article presents a game-theoretic model analyzing the strategic competition between hard and fiat money, involving a representative player and a consolidated bank (including the central bank). The findings reveal counterintuitive interactions between inflation, interest rates, and monetary...

We use a theoretical model to set up the conditions for a country to attain monetary stability by allowing for two freely tradable currencies to circulate in parallel. For this parallel system to function properly, confidence in the good behavior of the monetary authorities in charge of the two...

The Great Depression is the canonical case of a widespread currency war, with more than 70 countries devaluing their currencies relative to gold between 1929 and 1936. What were the currency war’s effects on trade flows? We use newly-compiled, highfrequency bilateral trade data and gravity...

The Federal Reserve is commonly depicted as an institution set up by domestic actors to fulfill domestic functions that only later took on international and geopolitical dimensions. Yet we have long had an abundant literature on the financial projection of US power (“Dollar Diplomacy”) in...

This case study of the Illinois banking market shows how the private market managed the crisis in the banknote market during the first year of the Civil War. Banknotes backed by southern bonds started their decline with the election of Lincoln causing their values to fall below par. The Illinois...

This article explores the dynamics of international currency competition and de-dollarization, focusing on the current dominance of the US dollar and potential challenges from the Chinese renminbi and BRICS countries. It reviews recent literature on currency statecraft, the political economy of...

This study investigated the extent of currency competition within the cryptocurrency market through the Hayek's concept of the denationalization of money, Hayek's original analysis primarily centered on competition revolving around the medium of the exchange function, This study posited that...

The relationship between private and public money has shaped the economic and legal debate over money for centuries. Private money can either compete with or complement public money and this depends on the applicable law and the relative powers of the State and private parties. The rise of...

This article explores cryptocurrencies and poses the research question, whether cryptocurrencies are the future of the currency market. The cryptocurrency market has undergone considerable growth, however given recent scandals of cryptocurrency markets and cryptocurrencies have led to increasing...

The coexistence of fiat money (cash) and digital monies constitutes a system of parallel currencies as media of exchange. This paper asks whether a new (digital) currency is essential: Does a new currency allow for a better resource allocation even if a fully accepted currency is in circulation...

China watchers have decried the emergence of the Cross-Border Interbank Payment System (“CIPS”) as a turning point in the move to dethrone the U.S. dollar. This Article situates CIPS, which clears and settles Chinese renminbi transactions, with other financial market infrastructures, drawing...

We investigate monopolistic tendencies and the intensity of currency competition on the crypto market in the light of Hayek’s "Denationalization of money". Interestingly, Hayek never considered differentiation and specialization by innovative private currencies could lead lasting currency...

We analyse the drivers of Bitcoin transactions against 44 fiat currencies in the largest peer-to-peer crypto exchanges. Momentum and volatility in the cryptoasset market, as well as volatility and liquidity in global financial markets do matter for Bitcoin trading. There is suggestive evidence...

Technology is reshaping money and payment systems in unprecedented ways. Catalysts include the launch of Bitcoin in 2009, the evolution of both decentralised and centralised technologies, the announcement of Libra in 2019, live trials of China’s Digital Yuan, and COVID-19, both in 2020.This...

How do cryptocurrency exchanges compete with each other? We show that small and large crypto exchanges appear to be complements, rather than substitutes, as traditional oligopoly theory would predict. When large exchanges list new tokens, trade volumes on small exchanges increase, and small...

Can competing stablecoins produce efficient and stable outcomes? We study competition among stablecoins pegged to a stable currency. They are backed by interest-bearing safe assets and can be redeemed with the issuer or traded in a secondary market. If an issuer sticks to an appropriate...

Despite the distinctive character of the Austrian approach to "microfoundations for macroeconomics", the literature on free banking contains a number of arguments which make use of game-theoretic concepts and models such as the well-known Prisoner's Dilemma model. While there can be no general a...

The author of this article draws special attention to two particular claims of the free bankers concerning the supposed working characteristics of a fractional-reserve free banking system which may strike the reader as questionable. The first of these relates to the alleged absence of a...

In the early 1870s, the global monetary system transitioned from bimetallism—a regime in which gold and silver currencies were tied at quasi-fixed exhange ratios—to the gold standard that was characterized by the use of (only) gold as the main currency metal by the largest and most advanced...

The coexistence of cash and digital currencies constitutes a system of parallel currencies. This paper tackles the question whether a new (digital) currency is essential: Does a new currency allow for a better resource allocation even if a fully accepted currency is in circulation and still...

In the two-country model in Benigno, Schilling & Uhlig (2022), the usage of a privately-issued crypto-asset as a global means of payment leads to the enforced synchronization of nominal interest rates, and hence to a loss of monetary policy autonomy. This paper shows that the same result obtains...

In the second half of the 19th century, the Chilean free banking system worked similarly to how Adam Smith describes the 18th century free banking system in Scotland. The characteristics of free banking that Smith identifies as conductive of successful outcomes—free entry, unlimited liability,...

The free-banking history of Switzerland is subdivided into periods with unfettered competition (1826–1881), and strict banknote regulation (1881–1907). This paper suggests that the Federal Banknote Act of 1881 was introduced to remedy the fragmentation of the unfettered-competition period,...

The Latin Monetary Union (hereafter LMU) was established in 1865 between France, Italy, Belgium and Switzerland. The agreement provided for the adoption of a common monetary base consisting of specie, and the adoption of the free circulation of gold and silver coins among them, whatever the...

In the early 1870s, the global monetary system transitioned from bimetallism-a regime in which gold and silver currencies were tied at quasi-fixed exhange ratios-to the gold standard that was characterized by the use of (only) gold as the main currency metal by the largest and most advanced...

For one variable-supply currency in isolation, one player's Cobb-Douglas utility depends on the current supply divided by the initial supply, multiplied by the inverse of the accumulative inflation/deflation. With equal weight assigned to both factors, money printing outweighs inflation, and...

This paper provides an historical perspective on reserve currency competition and on the prospects of the dollar as an international currency. It questions the conventional wisdom that competition for reserve-currency status is a winner-take-all game, showing that several currencies have often...

In the late eighteenth and early nineteenth century, Scotland had a stable financial system. Its stability arose from the pressure that private banks, which had the right to issue bank notes, placed on each other to behave prudently. Unlike in England, the Scottish banking system had no central...

The puzzle of underissuance of national bank notes disappears when one disaggregates data, takes account of regulatory limits, and considers differences in opportunity costs. Banks with poor lending opportunities maximized their issuance. Other banks chose to limit issuance. Redemption costs do...

We analyze a two-country economy with complete markets, featuring two national currencies as well as a global (crypto)currency. If the global currency is used in both countries, the national nominal interest rates must be equal and the exchange rate between the national currencies is a...

In the Middle Ages, tens of thousands types of uni-faced bracteate coins were struck in the period 1140−1520. The existence of hundreds of small independent currency areas with their own mints in central, eastern, and northern Europe and the strong link between bracteates and periodic...

Some central banks have maintained overvalued official exchange rates, while unable to ensure that supply of foreign exchange meets legitimate demand for current account transactions at that price. A parallel exchange rate market develops, in such circumstances; and when the spread between the...

Currently numerous market-driven cryptocurrencies challenge to dethrone the state-controlled supply of fiat money. The outcome hinges on the old question of whether privately produced money with or without government is possible. This paper revisits the issue by looking for insights in the...

In recent times, the comparison of crypto currencies to the 'wildcat' banking system of 18th century America has been an increasingly popular comparison, Elizabeth Warren is yet another proponent of this historical revisionism. The ordinary taught for the purposes of smearing private enterprise,...