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BOK Working Paper No.2017-13, Crowding out in a Dual Currency Regime? Digital versus Fiat Currency

Economic Research Institute (+82-2-759-5481) 2017.04.23 11447

 

Title : Crowding out in a Dual Currency Regime? Digital versus Fiat Currency
Authors : KiHoon Hong(Hongik University), Kyounghoon Park(BOK), Jongmin Yu(Hongik University)

 

<Abstract>

 

In this paper, we analyse a dual currency regime with fiat currency and digital currency and investigate potential crowding-out effects of fiat currency or digital currency under the framework of the traditional monetary economic model. We find that crowding out only occurs under extreme assumptions, i.e. extremely high costs associated with the use (medium of exchange and store of value) of one currency and extremely low costs associated with the use of the other currency.

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