I discuss private and central-bank-issued digital currencies, summarizing my prior research. I argue that prices of private digital currencies such as bitcoin follow random walks or, more generally, risk adjusted martingales. For central bank digital currencies, I argue that they enhance the “CBDC trilemma” facing a central bank: out of the three objectives, price stability, efficiency, and monetary trust, it can achieve at most two.

More on this topic

BFI Working Paper·Jun 10, 2025

Global Price Shocks and International Monetary Coordination

Veronica Guerrieri, Guido Lorenzoni, and Iván Werning
Topics: Monetary Policy
BFI Working Paper·Apr 22, 2025

The Invention of Corporate Governance

Yueran Ma and Andrei Shleifer
Topics: Monetary Policy
BFI Working Paper·Dec 16, 2024

Toward an Understanding of the Political Economy of Using Field Experiments in Policymaking

Guglielmo Briscese and John List
Topics: Monetary Policy