Private Money

  title={Private Money},
  author={Stephen D. Williamson},
A random matching environment is constructed where banks mitigate a mismatch between the timing of investment payo¤s and when agents wish to consume. Claims on banks may serve as media of exchange, i.e. private money. Two problems can emerge with private money. First, there may exist welfaredominated equilibria where banks hold low-return assets. Second, private media of exchange may be subject to lemons problems. In spite of these problems, the introduction of money can decrease welfare… 
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