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Publication date:
04/2020
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Cryptocurrencies, Currency Competition and the impossible Trinity
We analyze a two-country economy with complete markets, featuring two national currencies as well as a global (crypto)currency. If the global currency is used in both countries, the national nominal interest rates must be equal and the exchange rate between the national currencies is a risk-adjusted martingale. We call the result Crypto-Enforced Monetary Policy Synchronization (CEMPS).