# Monetary policy `kaal:entity:monetary-policy` **Status.** derived This node is assembled mechanically from the 27 claims that carry the concept tag `monetary-policy`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 27 claims across 10 works, 2012 to 2026. **2012** - [1998455-036](https://wulfkaal.github.io/claims/1998455-036) [failure/argued] *(failure mode)* -- If central banks were to purchase contingent capital securities issued by systemically important institutions in the primary or secondary market as part of monetary policy, the prospect of internalizing bank failure costs would be undermined, and primary market purchases could also undermine market participants' confidence in these instruments. > If the U.S. Federal Reserve Bank, the European Central Bank, and other central banks, as part of their monetary policy, were to purchase CCS issued by SIFIs in the primary or second- ary market, the prospect of internalizing bank failure costs could be undermined. Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455 **2014** - [2470008-009](https://wulfkaal.github.io/claims/2470008-009) [mechanism/argued] -- The unprecedented growth of the private fund industry combined with the low interest rate environment created by post crisis quantitative easing drove private fund managers to reach for yield. > The unprecedented growth in the private fund industry in combination with the low interest rate environment following the Federal Reserve's quantitative easing after the financial crisis of 2008-09 resulted in private fund managers' increasingly "reaching for yield". Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008 **2017** - [3067615-009](https://wulfkaal.github.io/claims/3067615-009) [mechanism/argued] -- An issuer can pre-define monetary policy in crypto economics by fixing the number of tokens created and issued, and a maximum token issuance combined with controlled token supply releases can make small increases in demand drive token prices higher. > A maximum token issuance in combination with controlled token supply releases can result in small increases in demand driving token prices higher. Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615 - [3067615-012](https://wulfkaal.github.io/claims/3067615-012) [design/argued] -- Adjusting commercial benefits associated with a token issuance is preferable to blunt monetary intervention, because it avoids more drastic measures such as emergency sales, building token reserves, or changing the token supply in circulation. > Fourth, adjusting the commercial benefits associated with a given token issuance avoids more drastic monetary policy intervention by way of emergency sales or building token reserves or a decrease or increase of token supply in circulation. Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615 **2018** - [3249860-006](https://wulfkaal.github.io/claims/3249860-006) [mechanism/asserted] -- In decentralized systems the functions previously performed by policy designers, central bankers, and economists in centralized markets are taken over by the token designer for the respective token economy. > Whereas policy designers, central bankers, and economists previously coordinated market design and economic regulations in centralized systems, these functions are taken over by the token designer for the respective token economy. Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 - [3249860-007](https://wulfkaal.github.io/claims/3249860-007) [failure/argued] *(failure mode)* -- The democratization of monetary policy in token economies creates a serious problem, because token designers lack the qualifications and institutional functions that centralized central banking distributes across multiple institutions and their staff. > This creates a serious problem for many token economies as the designers lack the qualifications and functions that are Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 - [3249860-008](https://wulfkaal.github.io/claims/3249860-008) [mechanism/asserted] -- An issuer's ICO strategy can pre-define the token economy's monetary policy by predetermining the fixed number of tokens created and issued in the ICO. > An issuers' ICO strategy can pre-define monetary policy by predetermining the fixed number of tokens created and issued in the ICO. Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 - [3249860-012](https://wulfkaal.github.io/claims/3249860-012) [design/argued] -- Adjusting the commercial benefits of a token issuance lets the issuer avoid more drastic monetary interventions such as emergency sales, building token reserves, or changing the token supply in circulation. > Fourth, adjusting the commercial benefits associated with a given token issuance avoids more drastic monetary policy intervention by way of emergency sales, building token reserves, or a decrease or increase of token supply in circulation. Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 - [3249860-013](https://wulfkaal.github.io/claims/3249860-013) [failure/asserted] *(failure mode)* -- Combining quasi-fiscal policy, increasing benefits attached to tokens, with monetary policy, increasing supply in circulation, may or may not have an effect on the market price of the tokens. > The combined effect of quasi-fiscal policy (increasing benefits associated with the tokens) and monetary policy (increasing the token supply in circulation) may or may not have an effect on the market price of the respective tokens. Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 **2019** - [3396522-001](https://wulfkaal.github.io/claims/3396522-001) [failure/argued] *(failure mode)* -- The unfettered discretion of fiat monetary policy makers can lead to arbitrary outcomes, because the overall value and stability of any fiat currency is contingent on the fluctuations and successes of a country's economy rather than on any fixed valuation basis. > The unfettered discretion of policy makers can lead to arbitrary outcomes.8 The overall value and stability of any fiat currency is contingent on fluctuations and successes of a country's economy.9 Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-002](https://wulfkaal.github.io/claims/3396522-002) [failure/argued] *(failure mode)* -- Monetary policy making for fiat currencies largely lacks transparency, and that opacity prevents markets from taking anticipatory action on policy indicators. > Lastly, monetary policy making for fiat currencies is largely lacking transparency. The lacking transparency of monetary policy making does not allow for anticipatory market action based on policy indicators. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-023](https://wulfkaal.github.io/claims/3396522-023) [failure/argued] *(failure mode)* -- Central bank price stability is elusive for two structural reasons: central banks are constantly lobbied to move money supply away from equilibrium, and even absent lobbying they face information asymmetries that prevent them from determining the optimal supply at any given moment. > Central banks are constantly being lobbied to increase or decrease money supply away from equilibrium.149 Moreover, even without lobbying, Central banks are subject to information asymmetries that do not allow them to determine the optimal amount of supply at any given point in time. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-024](https://wulfkaal.github.io/claims/3396522-024) [mechanism/argued] -- Stable cryptocurrencies escape part of the lobbying problem by hardcoding their policy rationales and outcomes into the protocol, which limits the amount of lobbying that can influence policy decisions. > By making part of their policy rationales and outcomes hardcoded solutions, stable cryptocurrencies limit the amount of lobbying that can affect policy decisions. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-025](https://wulfkaal.github.io/claims/3396522-025) [predictive/argued] -- Because hardcoded cryptocurrency policy is transparent and therefore predictable, market participants can anticipate policy and adjust behavior in advance, and such anticipatory reactions could over time make actual policy making the exception rather than the rule. > Because of this transparency and associated predictability, market participants can anticipate policy making and adjust behavior accordingly. In fact, such anticipatory policy reactions could, over time, make actual policy-making the exception rather than the rule. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-026](https://wulfkaal.github.io/claims/3396522-026) [failure/argued] *(failure mode)* -- Full hardcoding is impossible: no stable cryptocurrency can encode all required policies and policy actions with full transparency, because future policy needs cannot be anticipated ex ante. > No stable cryptocurrency can hardcode all required policies and policy making actions with full transparency as future policy cannot be fully anticipated ex ante, before the needs occur. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-027](https://wulfkaal.github.io/claims/3396522-027) [design/argued] -- Monetary policy for stable cryptocurrencies should combine hardcoded transparent rules with protocols enabling decentralized autonomous organizations, with decentralized but fully transparent policy DAOs functioning as the policy makers for what cannot be hardcoded. > monetary policy for cryptocurrencies can additionally be supported by protocols enabling decentralized autonomous organizations (DAOs).152 Decentralized but fully transparent policy DAOs can help function as policy makers. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-028](https://wulfkaal.github.io/claims/3396522-028) [failure/argued] *(failure mode)* -- The authors qualify their own case: stable cryptocurrencies can experiment with monetary policy on an unprecedented scale only because they are insulated from real world complexities and political positioning, and that advantage shrinks once real world market factors actually apply to them. > This allows them to experiment with monetary policy tools on an unprecedented scale. Such experimentation is limited if and when real-world market factors pertain to such stable cryptocurrencies. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-040](https://wulfkaal.github.io/claims/3396522-040) [empirical/evidenced] -- The authors adopt Schilling and Uhlig's result that official money and cryptocurrencies can co-exist in a manner consistent with stability, rejecting the framing that private currency and central bank money are necessarily mutually exclusive. > For our purposes, the important result is that it is possible for official money and cryptocurrencies to co-exist in a manner consistent with stability. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3402701-013](https://wulfkaal.github.io/claims/3402701-013) [design/argued] -- Bonds are the appropriate burning mechanism for a temporary drop in currency price caused by larger economic instability such as an act of God or war, since bonds can be redeemed above their sale price once the economy rebounds. > Bonds should be used to address a temporary larger economic instability which lowers a currency's price--due to an act of God, for instance, or war Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-027](https://wulfkaal.github.io/claims/3402701-027) [design/argued] -- Holding taxes are the implicit result of inflation borne by coin holders, and they should be set to account for the inefficiencies of the economy rather than the inefficiencies of maintaining the currency. > Holding taxes should account for the inefficiencies of the economy, instead of the inefficiencies of the maintenance of the currency Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-032](https://wulfkaal.github.io/claims/3402701-032) [condition/argued] *(failure mode)* -- The day-to-day stability mechanism can be fully automated by algorithm, but monetary and fiscal policy choices cannot be: the algorithm's parameters must be chosen by hand and adjusted regularly to balance security against efficiency. > However, monetary and fiscal policy choices cannot be fully automated. The parameters for the algorithm must be chosen by hand and adjusted regularly to balance security with maximal efficiency in response to network performance Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-033](https://wulfkaal.github.io/claims/3402701-033) [design/asserted] -- Parameter and policy choices for a stable cryptocurrency should be made by a decentralized autonomous organization, the Stability DAO or SDAO, which functions as a transparent, decentralized, open analog of the US Federal Reserve. > Such choices need to be made by a decentralized autonomous organization, which we call the Stability DAO or SDAO Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-035](https://wulfkaal.github.io/claims/3402701-035) [failure/argued] *(failure mode)* -- Transparency is not an unqualified good for monetary policy: a currency only partially backed by reserves can be arbitraged by a Soros-style shorting strategy much more easily when the quantity of reserves is public. > For instance, a currency partially backed by reserves can be successfully arbitraged by Soros' shorting strategy much easier if the quantity of reserves is known Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 **2020** - [3606663-038](https://wulfkaal.github.io/claims/3606663-038) [condition/argued] -- Conducting monetary policy through a central bank digital currency imposes a requirement on the technology layer: the underlying network protocol must enable the central bank to adjust the money supply at will and to act as lender of last resort with access to unlimited supply. > Moreover, in order to be able to conduct monetary policy with CBDC, the underlying network protocol would have to enable the central bank to adjust the money supply at will. Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663 **2021** - [3782216-035](https://wulfkaal.github.io/claims/3782216-035) [failure/argued] *(failure mode)* -- Trying to hold a peg at an artificial level deters new adopters and punishes existing members, and is the most likely way to induce a death spiral that collapses a currency; after a fundamental change in the economy the currency should be repegged instead. > Trying to maintain a peg at an artificial level prevents new members from adopting the currency and punishes members as they need to pay to maintain the artificial valuation. Maintaining the artificial valuation is the most likely way to induce a death spiral which collapses a currency. Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216 **2024** - [4900878-021](https://wulfkaal.github.io/claims/4900878-021) [definitional/asserted] -- Economic incentive designs are the core of tokenomics: they govern issuance, distribution, and use of tokens by emulating traditional monetary and fiscal policy and adapting it to the distinctive features of blockchain networks. > These designs emulate traditional monetary and fiscal policies, adapting them to the distinctive features of blockchain networks. Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878 **2026** - [6421319-002](https://wulfkaal.github.io/claims/6421319-002) [mechanism/argued] *(failure mode)* -- Monetary policy instruments become ceremonial under AI driven production, because central banks inject liquidity on schedules calibrated for scarcity economies while production compounds exponentially and money supply grows only linearly. > Central banks inject liquidity on schedules calibrated for scarcity economies—quarterly adjustments, annual targets, multi-year policy frameworks. Against AI production scaling, these instruments become ceremonial. Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. 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