This paper introduces into an overlapping generations model the civil court’s inability to distinguish different qualities of goods of the same kind. This friction prevents the enforcement of real credit contracts through the civil court. Given this environment, fiat money is introduced into the model as an intrinsically useless, but recognizable instrument for the court. With fiat money, there exists an equilibrium in which agents write pledgeable nominal debt contracts, while fiat money circulates as both a means of debt repayment and a means of payment for goods. This result does not require dynamic inefficiency or lack of double coincidence of wants. However, there can occur a shortage of real money balances for debt repayments, because lenders must pay fiat money for borrowers’ output before receiving the repayment of debt, in order for borrowers to obtain fiat money to repay debt. The central bank can resolve this bottleneck if it provides an elastic money supply through a discount window within each period. These results replicate two institutional features of the current monetary system—that is, fiat money being legal tender and a discount window offered by the central bank—in an unified framework.

本文将世代相传的民事法院无法区分同一类商品的不同质量的模型引入一个重叠的世代模型。这种摩擦阻止了通过民事法院执行真实的信贷合同。在这种环境下，法定货币会作为一种本质上无用但可为法院识别的工具引入模型中。对于法定货币，存在着一种平衡，代理人签发了可承诺的名义债务合同，而法定货币作为债务偿还的手段和商品的支付手段而流通。该结果不需要动态的效率低下或缺乏需求的双重巧合。但是，由于债务人必须在偿还债务之前必须为借款人的产出支付法定货币，因此实际的货币余额可能会不足以偿还债务。为了使借款人获得法定货币以偿还债务。如果中央银行在每个时期内通过折扣窗口提供弹性货币供应，则可以解决此瓶颈。这些结果在一个统一的框架内复制了当前货币体系的两个制度特征，即法定货币是法定货币，中央银行提供了贴现窗口。