Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207144 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
Economics Working Paper Series No. 19/322
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
We suggest that flexible majority rules for currency issuance decisions foster the stability of a cryptocurrency. With flexible majority rules, the voteshare needed to approve a particular currency issuance growth is increasing with this growth rate. By choosing suitable parameters for these flexible majority rules, we show that optimal growth rates can be achieved in simple settings. Moreover, with flexible majority rules, changes in the composition of growth-friendly and growth-adverse agents only have a comparatively moderate impact on growth rates, and extreme growth rates are avoided. Finally, we show that optimal money growth rates are realized if agents entering financial contracts anticipate ensuing inflation rates determined by these flexible majority rules.
Subjects: 
Digital currency
central bank
voting
majority rule
flexible majority rules
JEL: 
D72
E31
E42
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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