Banks, private money, and government regulation

• 成果类型: Article
• 署名作者: Li, Yiting
• 署名单位: National Taiwan University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2006.02.005
• 发表日期: 2006
• 页码: 1797-1813
• 关键词: Private money; reserve requirements; random matching models

摘要

We study competition between inside and outside money in economies with trading frictions and financial intermediation. Claims on banks circulate if the redemption rate is low. When the quantity of fiat money is scarce, coexistence of inside and outside money dominates equilibria with a unique medium of exchange. If outside money is ample, banks choose to redeem claims in outside money, which increases welfare. Under binding reserve requirements, tightening monetary policy leads to credit rationing. Our results support recent trends toward lower reserve requirements. However, we also identify situations where restrictions on note issue are beneficial. (c) 2006 Elsevier B.V. All rights reserved.