Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/254241 
Year of Publication: 
2022
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 05-2022
Publisher: 
Philipps-University Marburg, School of Business and Economics, Marburg
Abstract: 
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 remains in circulation? Using the dual currency search model of Kiyotaki and Wright (1993), we show how the introduction of a secondary currency affects average utility. There is some scope for a welfare improvement, the welfare effect depends on differences in returns and costs, and, in particular, the fraction of cash traders who will be replaced by digital money traders.
Subjects: 
digital money
dual currency regime
welfare comparison
JEL: 
E41
E42
E51
Document Type: 
Working Paper

Files in This Item:
File
Size
495.93 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.