Are alternative currencies a substitute or a complement to fiat money? Evidence from cross-country data

D. Pfajfar, G. Sgro, W.B. Wagner

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper studies the determinants of the usage of alternative currencies (currencies which exists parallel to the national currency of a country) across countries. We find that monetary stability, financial sector development and a country’s general level of economic development are all positively related to both the likelihood of a country hosting an alternative currency as well to the number of alternative currencies a country is hosting. This suggests that these currencies, in contrast to their historical function, mainly act as a complement to fiat money. We discuss the implications for the role of fiat money in the economy as well as for the welfare effects of alternative currencies.
Original languageEnglish
Pages (from-to)45-56
JournalInternational Journal of Community Currency Research
Volume16
Issue numberD
Publication statusPublished - 2012

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