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No, they're talking about private issuers, creating fiat notes.
They do discuss the presence of a centralized issuer in one section. Unsurprisingly that leads to inefficient outcomes even with commitment.
Are they all issuing fiat notes of the same currency?
What I meant by centralized issuers, was private issuers of notes that are only redeemable with them: i.e. BoA issues a 2 ounce gold note. No other bank is obligated to honor that redemption.
I think that's the way it's modeled.
In the sense that, one issuer cannot offer to redeem the notes of another issue at a different price. Each issuer controls the price of their own notes.
Ok. I believe all of these different institutions have existed, so it might be relevant to allow for them in a model of competing currency issuers.
The findings still seem fairly intuitive.
Yes. I think the contribution was considering whether or not there are dynamic reputation strategies that could lead to an efficient outcome even without full commitment, and the answer is no. That part was a bit over my head though.
It makes sense to me. Reputation offers a persistent opportunity for rent seeking. Eventually, someone will attempt to capitalize on that and they'll start outcompeting their peers, which triggers a race to the bottom.
That's why I wondered about the case of private issuers of actual precious metal coinage. Reputation plays a much smaller role there, although they still need people to believe their purity claims.
Are the authors only talking about centralized currency issuers?
The competition point seems different if we're talking about something like private mints creating gold or silver coins, than if we're talking about private issuers of notes that are only redeemable with the issuer.