Template-Type: ReDIF-Paper 1.0
Author-Name: Markus Brunnermeier
Author-X-Name-First: Markus
Author-X-Name-Last: Brunnermeier
Author-Name: Harold James
Author-X-Name-First: Harold
Author-X-Name-Last: James
Author-Name: Jean-Pierre Landau
Author-X-Name-First: Jean-Pierre
Author-X-Name-Last: Landau
Title: The digitalization of money
Abstract: The ongoing digital revolution may lead to a radical departure from the traditional model of monetary exchange. We may see an unbundling of the separate roles of money, creating fiercer competition among specialized currencies. On the other hand, digital currencies associated with large platform ecosystems may lead to a re-bundling of money in which payment services are packaged with an array of data services, encouraging differentiation but discouraging interoperability between platforms. Digital currencies may also cause an upheaval of the international monetary system: countries that are socially or digitally integrated with their neighbors may face digital dollarization, and the prevalence of systemically important platforms could lead to the emergence of digital currency areas that transcend national borders. Central bank digital currency (CBDC) ensures that public money remains a relevant unit of account.
Length: 35 pages
Creation-Date: 2021-05
File-URL: https://www.bis.org/publ/work941.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work941.htm
File-Format: text/html
Number: 941
Keywords: digital money, digital currency area, digital dollarization, currency competition
Classification-JEL: E42, E52, F33
Handle: RePEc:bis:biswps:941