Money Creation in Fiat and Digital Currency Systems

Gross, Marco; Siebenbrunner, Christoph

doi:10.5089/9781513521565.001

Cited by 20 publications

(11 citation statements)

References 15 publications

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“…Recent research (e.g. Gross and Siebenbrunner, 2019) has also shown that the monetary transmission mechanism to the real economy within a multibank financial system using central bank digital currencies (CBDCs) in a completely cashless economy would work analogously to the mechanism in the fiat money system (i.e. money without intrinsic value as opposed to commodity money) currently in place.…”

Section: Opportunities For Blockchain Use Due To the Pandemicmentioning

confidence: 99%

Blockchain: Is it the future for the tourism and hospitality industry?

Önder

Gunter

2020

Tourism Economics

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Recently, blockchain and cryptocurrencies have become topics of discussion in both research and industry. Iansiti and Lakhani perceive blockchain as a foundational technology rather than a disruptive one, since potentially new economic and social systems can be based on blockchain. Therefore, understanding blockchain and contemplating its impact on the tourism and hospitality industry is essential. The tourism and hospitality industry has to focus not on the technology itself but on how it can be used for the benefit of consumers and suppliers, while at the same time creating new tourism products or systems. The purpose of this study is to explore and identify use cases for blockchain for the tourism and hospitality industry. In addition, an outlook on potential future blockchain applications given the current COVID-19 pandemic is provided.

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Section: Opportunities For Blockchain Use Due To the Pandemicmentioning

confidence: 99%

Blockchain: Is it the future for the tourism and hospitality industry?

Önder

Gunter

2020

Tourism Economics

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“…These two events ignited a conversation about the technicalities of money creation that went beyond the elite circles of economic experts to which it had thus far been constrained. The insights that money was created by private banks following a profit-motive, that such private banks' monies were made homogeneous and legitimate by a State accepting them in payment of taxes, and that money was thus in practice created "out of thin air, " gradually extended among activists and scholars (Ryan-Collins et al, 2011;Benes and Kumhof, 2012;Werner, 2014;Kumhof and Jakab, 2016), and were eventually confirmed by key actors in the governance of today's monetary system such as the Bank of England (McLeay et al, 2014) or the IMF (Gross and Siebenbrunner, 2019). "The Great Monetary Settlement, " as Martin (2014) frames the alliance between profitseeking bankers and stability-seeking rulers first implemented through the creation of the Bank of England, set the stage for the growth of monetary society and the progress of capitalism (Ingham, 2008;Desan, 2014;Martin, 2014).…”

Section: Governing Moneymentioning

confidence: 99%

“…That is, access to credit (or new money) is granted to those that are already creditworthy. Bolstering economic swings because bankers grant credit when they are optimistic about the economy and constrain debt creation when less optimistic; a procyclical behavior that, among others, results in regular financial crisis and systemic instability (Benes and Kumhof, 2012;Gross and Siebenbrunner, 2019).…”

Section: Governing Moneymentioning

confidence: 99%

A Route to Commons-Based Democratic Monies? Embedding the Governance of Money in Traditional Communal Institutions

Barinaga

2020

Front. Blockchain

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The financial crisis of 2008 resulted, among other, on a popular awareness that the monetary system was not working for the interest of the many. The blockchain technology that was launched soon after offered monetary activists and entrepreneurs a tool to re-imagine, re-claim and re-organize money along a vague ideal of a commons paradigm. A wave of monetary experimentation ensued that took a most concrete form in two entrepreneurial spaces: crypto-currencies with global ambitions and local currencies based on communal democracy. Seemingly distinct on the outset, both strands share a determination to develop a monetary system that serves the many. This has led participants on both sides to reach out toward each other. The article looks at one such attempt: the Sarafu community crypto-currencies in Kenya. These currencies are embedding the creation of money in traditional community savings groups. Using Eleanor Ostrom’s framework and building on interview and ethnographic material, the article identifies the economic logic of mutualization proper of the savings groups as one that transforms private assets (one’s savings) into a financial commons for the group. To build on this logic, the Sarafu model in-the-making is embedding the production and governance of the new community cryptocurrencies in these saving groups. In that doing, Sarafu has the potential to advance a new architecture of money. However, findings suggest that the standardization and automation of the new monetary rules through smart contracts impose neoliberal ideas that slipped into the code, risking the erosion of the very communal decision-making processes that made savings groups interesting anchors of a money commons in the first place.

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“…These issuances are studied through sectoral balance sheet dynamics based on double-entry bookkeeping principles. This approach is based on the following works: [4,[13][14][15].…”

Section: The Second Pillar: a Sectoral Balance Sheet Dynamics; The Crmentioning

confidence: 99%

The Future of Money and the Central Bank Digital Currency Dilemma

2020

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In this paper we set out a three-pillar monetary-financial framework to (i) analyze, categorize and compare past, current and emerging means of payment; to (ii) capture their creation and destruction processes through sectoral balance sheet dynamics; and to (iii) identify the inherent risks to the current monetary-financial system, also known as the fractional reserve banking system. These risks, which stem from sudden shifts in money demand and supply, are as follows: (I) risk of a cashless society; (II) risk of structural bank disintermediation; (III) risk of systemic bank runs; (IV) risk of currency substitution; and (V) risk of economic and financial bubbles. This framework will guide the assessment of the central bank digital currencies (CBDC), which are considered as the next step in monetary evolution. We will analyze two large groups of CBDC proposals: (i) proposals aimed at complementing cash and bank deposits; and (ii) proposals aimed at replacing all bank deposits with CBDCs. We find that once CBDCs are issued in both sets of proposals, there is always a trade-off between low levels of (I), (IV), (V), risks and high levels of (II) risk. This trade-off could also be defined as the CBDC dilemma, which states that in most CBDC proposals it is impossible to have both of the following at the same time: (1) low levels of (I), (IV) and (V) risks; and (2) low levels of (II) risk. Finally, we suggest that further research on CBDCs should focus on the second group of proposals on a phase-in basis in order to also mitigate the structural bank disintermediation risk and hence to overcome the CBDC dilemma.

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Money Creation in Fiat and Digital Currency Systems

Cited by 20 publications

References 15 publications

Blockchain: Is it the future for the tourism and hospitality industry?

Blockchain: Is it the future for the tourism and hospitality industry?

A Route to Commons-Based Democratic Monies? Embedding the Governance of Money in Traditional Communal Institutions

The Future of Money and the Central Bank Digital Currency Dilemma

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