Monetary sovereignty in the digital era. The law & macroeconomics of digital private money

The relationship between private and public money has shaped the economic and legal debate over money for centuries. Private money can either compete with or complement public money and this depends on the applicable law and the relative powers of the State and private parties. The rise of disruptive digital and cryptographic technologies applied to money creation has the potential to innovate this century-long debate. This article proposes a framework to analyse the role of the law in the relation to the risks and benefits of having circulating private money competing with public money. Accordingly, the article highlights the unprecedented threat to monetary sovereignty, the risks to systemic stability and, ultimately, to democratic decision-making prompted by digital private money. To counter these risks while seizing potential efficiency gains generated by novel forms of private money, the article proposes to regulate convertibility and fragment by regulation such a potentially global market.