Insights / Research BriefApr 11, 2024

On Digital Currencies

In a work summarizing his previous research, the author argues that prices of private digital currencies follow random walks, while for central bank digital currencies the challenge is to address three objectives, price stability, efficiency, and monetary trust, of which only two are achievable.
 

For more on Harald Uhlig’s related research:
Benigno, Pierpaolo, Linda Schilling and Harald Uhlig (2019). Global (Crypto-)Currencies and Currency Competition. Crypto Review, 1, 01-03.
Benigno, Pierpaolo, Linda Schilling and Harald Uhlig (2022). Cryptocurrencies, Currency Competition and the Impossible Trinity. Journal of International Economics, 136.
Uhlig, Harald (2022). A Lunatic Stablecoin Crash. BFI WP 2022-95, Becker Friedman Institute, University of Chicago, Chicago.
Uhlig, Harald (2023). Review Article: Eswar S. Prasad: How the Digital Revolution is Transforming Currencies and Finance. Business Economics, 58, 201–204.
Uhlig, Harald and Taojun Xie (2021). Parallel Digital Currencies and Sticky Prices. BFI WP 2020-188, Becker Friedman Institute, University of Chicago, Chicago.
For general background on cryptocurrencies:
Among a vast literature on the subject, the author recommends the following three articles and one book:
Allen, Franklin, Xian Gu and Julapa Jagtiani (2021). A Survey of Fintech Research and Policy Discussion. Review of Corporate Finance, 1 259-339.
Chiu, Jonathan, Mohammad Davoodalhosseini, Janet Hua Jiang, Francisco Rivadeneyra and Yu Zhu (2023). Central Bank Digital Currencies and Banking: Literature Review and New Questions. Bank of Canada, Staff Discussion Paper 2023-4.
Kosse, Anneke and Mattei, Ilaria (2023). Making Headway—Results of the 2022 BIS Survey on Central Bank Digital Currencies and Crypto. BIS Papers, No. 136.
Prasad, Eswar S. (2021). The Future of Money How the Digital Revolution Is Transforming Currencies and Finance. Harvard University Press, Boston, MA.