On the equivalence of private and public money

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90 Scopus citations


When does a swap between private and public money leave the equilibrium allocation and price system unchanged? To answer this question, the paper sets up a generic model of money and liquidity which identifies sources of seignorage rents and liquidity bubbles. We derive sufficient conditions for equivalence and apply them in the context of the “Chicago Plan”, cryptocurrencies, the Indian de-monetization experiment, and Central Bank Digital Currency (CBDC). Our results imply that CBDC coupled with central bank pass-through funding need not imply a credit crunch nor undermine financial stability.

Original languageEnglish (US)
Pages (from-to)27-41
Number of pages15
JournalJournal of Monetary Economics
StatePublished - Oct 2019

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


  • CBDC
  • Chicago plan
  • Equivalence
  • Inside money
  • Monetary system
  • Money creation
  • Outside money
  • Sovereign money


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