NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Redeemable Platform Currencies

Yang You, Kenneth S. Rogoff

NBER Working Paper No. 26464
Issued in November 2019
NBER Program(s):Economic Fluctuations and Growth Program, International Finance and Macroeconomics Program, Monetary Economics Program

Can massive online retailers such as Amazon and Alibaba issue digital tokens that potentially compete with bank debit accounts? We explore whether a large platform’s ability to guarantee value and liquidity by issuing prototype digital tokens for in-platform purchases constitutes a significant advantage that could potentially be leveraged into wider use. Our central finding is that unless introducing tradability creates a significant convenience yield, platforms can potentially earn higher revenues by making tokens non-tradable. The analysis suggests that if platforms have any comparative advantage in issuing tradable tokens, it comes from other factors.

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Document Object Identifier (DOI): 10.3386/w26464

 
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