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Working Paper
The Cost of Information in the Blockchain: A Discussion of Routledge and Zetlin-Jones
The volatility of crypto currencies hinders their ability to be media of exchange or stores of value, leading to the implementation of exchange-rate pegs in an attempt to stabilize these currencies. This strategy has been used by crypto currencies such as US Dollar Tether, Steem Backed Dollar and TrueUSD; and was previously adopted in countries such as Brazil, Mexico and Argentina. However, an exchangerate peg is vulnerable to speculative attacks if it is not 100% backed by reserves, as discussed in Obstfeld (1996). Using insights from the bank-run literature, Routledge and Zetlin-Jones ...