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Federal Reserve Bank of St. Louis
Working Papers
Should the central bank issue e-money?
Charles M. Kahn
Francisco Rivadeneyra
Tsz-Nga Wong

Should a central bank take over the provision of e-money, a circulable electronic liability? We discuss how e-money technology changes the tradeoff between public and private provision, and the tradeoff between e-money and a central bank's existing liabilities like bank notes and reserves. The tradeoffs depend on i) the technological setup of the e-money system (as a token or an account; centralized or decentralized); ii) the potential improvement in the implementation and transmission of monetary policy; iii) the risks to safety and privacy from cyber attacks; and iv) the uncertain impact on banks' efficiency and financial stability. The most compelling argument for central banks to issue e-money is to address competition problems in the banking sector.

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Download https://doi.org/10.20955/wp.2019.003
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Charles M. Kahn & Francisco Rivadeneyra & Tsz-Nga Wong, Should the central bank issue e-money?, Federal Reserve Bank of St. Louis, Working Papers 2019-3, 18 Jan 2019.
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Keywords: central bank digital currencies; e-money; cryptocurrencies; token- and account- based payment payments
DOI: doi.org/10.20955/wp.2019.003
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