Abstract

A dominant BigTech trading platform can set up a ledger that expands uncollateralized credit. This lowers the equilibrium interest rate, but also increases rent extraction by the platform and sacrifices privacy concerns. A platform finds it particularly profitable to set up such a system in a high-inflation environment. Policymakers attempting to regulate BigTech platforms or introduce a public alternative (e.g., a CBDC ledger) face a trilemma: no system can simultaneously achieve efficient credit enforcement, limit rent extraction, and preserve user privacy.