Balancing public and private interests: Crypto, stablecoin and central bank digital currency

The rise of new forms of private money has triggered an ‘old’ economic question about the appropriate balance between private and public interests in money and payments. The main aim of this paper is to explore how various digital means of payment may co-exist in the future: bank deposits, unbacked cryptos, stablecoins and Central Bank Digital Currency (CBDC). We summarize the spectrum of policy options for regulating unbacked cryptos and stablecoins, from freely allowing them to fully prohibiting and options in between these extremes. We argue that convertibility between public and private money should be a key principle for the design of CBDC as well as for the regulation of unbacked cryptos and stablecoins that may potentially be widely adopted as a future means of payment.