Distributed ledgers and the governance of money

A-Tier
Journal: Journal of Financial Economics
Year: 2025
Volume: 167
Issue: C

Authors (3)

Auer, Raphael (Bank for International Settlem...) Monnet, Cyril (not in RePEc) Shin, Hyun Song (not in RePEc)

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Distributed ledgers promise to enable the classical vision of money as a universal transaction record. But is it ever optimal to update a ledger through decentralized consensus? Analyzing an exchange economy with credit, we show that centralized updating is optimal when long-term rewards are more valued, minimizing redundant validation costs and maximizing economic surplus. Decentralization becomes preferable under weaker intertemporal incentives and when validators are drawn from market participants. We show how competing ledgers – anonymous or identified, permissioned or permissionless – can achieve socially optimal outcomes even in low-trust environments. Our framework provides a foundation for designing robust and efficient ledger systems.

Technical Details

RePEc Handle
repec:eee:jfinec:v:167:y:2025:i:c:s0304405x25000340
Journal Field
Finance
Author Count
3
Added to Database
2026-01-24