Coexistence of Monies as the Asymmetric Equilibrium of an Anonymous Game

The present paper shows that the presence of a government com- mitted to accepting legal tender ensures that legal tender coexists with either an international or a local currency, even when residents have identical preferences. This result is obtained as an asymmetric equi- librium of an anonymous game with atoms. Hence, monies coexistence may arise as a consequence of money demand equilibrium conditions, rather than strategic externalities associated with economic integra- tion. There is a symmetric equilibrium where everybody goes for legal tender only when it gives a payoff greater than the other money. The results are derived by constructing a game for the choice of UK resi- dents between Pounds and Euros.