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Private Money, Settlement, and Discount: A CommentStacey L. Schreft |
Abstract Temzelides and Williamson present a model of private currency issuance to study the effect of clearing arrangements on the prices at which private currencies trade, on the volume of exchange, and on welfare. Their findings hinge on three factors: the location of the issuers relative to the area in which their currencies circulate, whether there is an arrangement for clearing nonlocally issued currencies, and whether agents are fully informed about the quality of the currencies. This paper finds that the Temzelides-Williamson model provides valuable insights about historical experiences with private paper monies, but it raises more questions than it answers regarding electronic currencies. The model can, however, serve as a useful point of departure for further research. Stacey L. Schreft is an assistant vice president and economist at the Federal Reserve Bank of Kansas City. These comments on “Private Money, Discount, and Settlement” by Ted Temzelides and Stephen William-son were delivered at the April 2000 Carnegie-Rochester Conference on Public Policy. The views expressed are those of the author and not necessarily those of the Federal Reserve Bank of Kansas City or the Federal Reserve System.Schreft e-mail: stacey.l.schreft@kc.frb.orgBack to top RWP home |