Description
Abstract: Since the introduction of Bitcoin in 2008, thousands of different cryptocurrencies have been developed and hundreds of exchanges have opened for trading these currencies. While many of these currencies have specialized uses, some – including Bitcoin and Ethereum – have become household names. An increasingly rich set of markets and activities are being developed around these currencies, including trade in crypto-based derivatives, fully decentralized exchanges, and crypto lending platforms. In addition, a majority of the world's central banks now report that they are investigating the possibility of issuing central bank digital currency (CBDC), and a handful of central banks have already begun to do so. The rapid growth of digital currencies, both private and public, raises a wide range of interesting and fundamental economic questions, and a young but fast-growing literature in economics is starting to provide answers. This special issue contains nine papers and corresponding discussions on the frontier of this new literature. These papers were presented at a virtual workshop on October 7-9, 2020, which was organized jointly by the Bank of Canada, Rutgers University, the Journal of Economic Dynamics and Control, and the Search and Matching in Macro and Finance (SaMMF) Virtual Seminar Series.1 We are grateful to all of the workshop participants, and especially to the discussants, for helping us bring together an interesting and innovative set of papers on this topic.