Are Shadow Moneys Money Proper? A Critical Discussion from the Perspective of the History of Monetary Theory

Abstract

ABSTRACT We address the issue of whether some financial instruments produced by financial innovation, like the so-called shadow moneys, can be regarded as proper money. This is done by examining some past contributions (by Menger, Jevons, Keynes and Hicks) on the nature of money and its fundamental properties. We argue that the most satisfactory contributions come from Hicks, who holds that the essential function of money is to be the economy’s standard of value. On these grounds, we conclude that shadow moneys cannot be regarded as money in a proper sense. Neither are they the economy’s standard of value nor are they a universally accepted means of payment. Their function as a liquid store of value is not sufficient for them to be qualified as money.