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David Yermack, Max Raskin, Fahad Saleh

2018/11/16

How do private digital currencies affect government policy? Page 1 How do private digital currencies affect government policy? David Yermack NYU Stern School of Business, NBER & ECGI November 16, 2018 Max Raskin NYU School of Law Fahad Saleh McGill University - Desautels Page 2 We have the first global currency crises since the invention of private digital currency Page 3 Digital currencies, most prominently Bitcoin, circulate alongside unstable fiat currencies Page 4 • Risk Reduction Non-positive correlation with local economic risks provides investors with a diversification opportunity • Restrained Monetary Policy The difficulty of excluding digital currencies from the market reduces gains from seigniorage, thereby inducing lower inflation Main Finding 1: Digital currencies enhance citizen welfare Page 5 • Diversification Digital currencies serve as a hedge asset, thereby facilitating investment in high-risk …