{"title":"Best Before? Expiring Central Bank Digital Currency and Loss Recovery (Extended Abstract)","authors":"C. Kahn, M. Oordt, Yu Zhu","doi":"10.4230/OASIcs.Tokenomics.2021.7","DOIUrl":null,"url":null,"abstract":"Many central banks are considering issuing digital cash substitutes. An important property of physical cash payments is resilience —for example, imperviousness to power outages and independence of electronic/network coverage. These properties also make cash payments important in remote communities. Policy makers are considering building similar offline payment functionality into digital cash substitutes, while their digital nature allows for novel features that could make them more desirable than physical cash. This paper analyzes the possibility of introducing an expiry date for offline digital currency balances to automate personal loss recovery. Our results show this functionality could have a substantial positive impact on consumer demand for offline digital currency balances. We also examine the welfare effects of adjustments to the expiry date: small increases from the optimum cause little damage, but small decreases from the optimal expiry date can have a large negative impact. More information sharing between consumers and the central bank can improve loss recovery but has an ambiguous impact on social welfare.","PeriodicalId":174732,"journal":{"name":"International Conference on Blockchain Economics, Security and Protocols","volume":"52 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"6","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Conference on Blockchain Economics, Security and Protocols","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.4230/OASIcs.Tokenomics.2021.7","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 6
Abstract
Many central banks are considering issuing digital cash substitutes. An important property of physical cash payments is resilience —for example, imperviousness to power outages and independence of electronic/network coverage. These properties also make cash payments important in remote communities. Policy makers are considering building similar offline payment functionality into digital cash substitutes, while their digital nature allows for novel features that could make them more desirable than physical cash. This paper analyzes the possibility of introducing an expiry date for offline digital currency balances to automate personal loss recovery. Our results show this functionality could have a substantial positive impact on consumer demand for offline digital currency balances. We also examine the welfare effects of adjustments to the expiry date: small increases from the optimum cause little damage, but small decreases from the optimal expiry date can have a large negative impact. More information sharing between consumers and the central bank can improve loss recovery but has an ambiguous impact on social welfare.