Abstract

This paper studies strategic decision making by a private currency ledger controller facing competition from public money and/or other ledgers. It chooses a markup fee for making payments using its ledger and the settlement asset for credit contracts. A monopoly ledger controller can incentivize contract enforcement across the financial sector by threatening exclusion but can also extract rents through its pricing power. The emergent market structure bundles the provision of ledger and trading technologies. Regulation should balance better contract enforcement against higher ledger rent extraction.