Idiosyncrasies of Money: 21st Century Evolution of Money

Paul Mugambi,Daniel Ogachi,Lydia Bares,Zoltan Zeman

doi:10.3390/economies9010040

Abstract

This paper examines the question of what kind of money will govern the 21st century by examining the developments which characterise this landscape. On the basis of a review of the available literature and evidence, it is clear that certain technological innovations, such as the movement towards electronic money, will undoubtedly change how we operate. However, the conclusion in this paper is less sanguine regarding the prospects of a global currency, regional monetary unions, or states’ exit from or central banks’ control of money. This paper also sees poor prospects for cryptocurrencies at the moment, given their focus on the decentralisation and politicisation of money, because money requires a backstopping force, making it inherently political. Finally, this paper considers how regulators may seek to ensure that money in its digital form is not taken advantage of and applied in malevolent activities. The study used correlation to establish the level of association among variables. A multiple regression analysis was used to draw an econometric model explaining the relationship between the independent and dependent variables. The following variables were used as independent variables: monetary aggregate (M1), harmonised index of consumer prices (HICP), Euro Interbank Offered Rate (EURIBOR), US dollar/euro, and the USD value of Bitcoin. Multiple regression predicted that when inflation rises, the money supply will decrease. M1 includes cash in circulation, current deposits, and other than demand deposits. The study concludes that price increases encourage people to keep their money in longer-term deposits, including in cryptocurrency. Additionally, an increase in EURIBOR and US dollar/euro reduces the supply of money. Otherwise, an increase in the price of bitcoin in the economy would increase the overall money supply.

Highlights

Money performs various economic functions in society: as a store of value, as a unit of account, and as a medium of exchange (Carstens 2019)
We do not think this is sufficient for us to witness a global currency. Given such a move’s political ramifications, we argue that there will be the need for full economic globalisation and political globalisation and a single political authority source for a global currency to arise
It examined the future of physical cash in light of electronic money and digital currency made possible by technological evolution

Summary

Introduction

Money performs various economic functions in society: as a store of value, as a unit of account, and as a medium of exchange (Carstens 2019). People are usually willing to accept whatever “thing” is described as money purely on the basis of trust that others will accept this “thing” in exchange for goods and services Remove this trust, which is a function of future expectations, and the coins, notes and other things that are referred to as money become worthless. In this sense, money can adequately be described as a social convention or a social contrivance. There have been times during which money was represented by cowrie shells, cigarettes, stones, gold, coins, and notes, and money is increasingly being represented in electronic formats (Carstens 2019). This all feeds back to the point that money is a social convention and that the thing that symbolises

Methods

Results

Conclusion