Dirk Niepelt
Study Center Gerzensee; University of Bern; CEPR; CESIfo
This paper offers a macroeconomic perspective on the "Reserves for All" (RFA) proposal to let the general public hold electronic central bank money and transact with it. I propose an equivalence result according to which a marginal substitution of outside money (e.g., RFA) for inside money (e.g., deposits) does not affect macroeconomic outcomes. I identify key conditions for equivalence and argue that these conditions likely are violated, implying that RFA would change macroeconomic outcomes. I also relate the analysis to common arguments found in discussions on RFA and point to inconsistencies and open questions.
JEL Code: E42, E51, E58, E61, E63, H63.
Full article (PDF, 28 pages, 237 kb)