How should independent central banks react if pressured by fiscal policymakers? We study an environment with strategic monetary-fiscal interactions where the central bank has a limited degree of commitment to follow policies over time and the fiscal authority has none. We contrast the...

After introducing digital currency, the central bank emerges as a monopolist bank. It then faces an "impossible trinity". To achieve price stability and financial stability, optimal consumption allocation is sacrificed. In this paper, I show that fiscal policy designed in coordination with the...