Title

Platforms, Tokens, and Interoperability

Author(s)

Markus Brunnermeier Markus Brunnermeier (Princeton University)

Jonathan Payne Jonathan Payne (Princeton University)

Abstract

Digital money requires a ledger. By integrating this ledger with its other ledgers, a platform can enforce repayment of uncollateralized credit, beyond the ability of the banking sector. However, by controlling interoperability to other platforms' ledgers, an incumbent platform can "lock-in" customers and increase its market power. Open banking, which gives users control of interoperability, limits uncollateralized credit. Introducing CBDC as digital legal tender (on an isolated ledger) hurts credit extension, but enhances it when combined with an open architecture public ledger as a "smart CBDC."

Creation Date

2022-06

Section URL ID

Paper Number

2022-8

URL

https://drive.google.com/file/d/1-CtqFPxRVEM525kaeXDzrcn9d0bpMIWH/view

File Function

Jel

E50, E59

Keyword(s)

Tokens, ledgers, interoperability, smart contracts, platforms, open banking, open architecture, financial inclusion, "smart CBDC", "PlatFi"

Suppress

false

Series

13