Abstract
External shocks, like the climate catastrophe or the COVID-19 pandemic, as well as intrinsic fallacies like the securitization of bad debt leading up to the financial crisis in 2008, point to the need for updating our monetary and financial systems. Ensuring their adequacy and resilience is an important factor for sustainability at large. This paper examines the definitions of “money” and “currency” in financial legislation as a foundational factor in achieving systemic resilience by allowing or hampering monetary innovation and diversity. From the unencumbered vantage point that the practice of complementary currencies offers, definitions of the terms “money” and “currency” are here traced through the laws and regulations of the United States of America, from the beginnings of modern banking to the recent rulings on crypto-currencies. They are both found to be used and defined in contradictory ways that are inapt even in regard to conventional modern banking practices, let alone when applied to novelty in payment, issuance and valuation. Consequently, this paper argues that basic legal definitions need to be reviewed and consolidated to enable the innovation and diversification in monetary systems needed for long term macro-economic stability. With this in mind, a terminology that is consistent with monetary practice—current, past and future—as well as the procedural difficulties of reforming laws and regulations is proposed.
Highlights
Since the global financial crisis in 2008, two monetary phenomena have garnered unprecedented attention by academics, policymakers, the media and the general public alike
While legal professions may be limited in what they can see and say due to disciplinary expectations and the terminological framework they inherited, the transdisciplinary approach of this paper lends a fresh rigor and relevance to the seemingly drained research question of “what is the legal definition of money”
Swers to the question of “what is the legal definition of money” that revealed a level of most appearances word “currency”
Summary
Since the global financial crisis in 2008, two monetary phenomena have garnered unprecedented attention by academics, policymakers, the media and the general public alike. From a vantage point in this practice of currency innovation, this paper looks back at the legal definitions of conventional money and questions their adequacy for enabling long-term stability through monetary diversification This question is based on an argument of ecological economics, which sees both phenomena, diversity and systemic stability, as connected; as in natural ecosystems, so in finance: Theoretic ecology defines sustainability to be a trade-off function between efficiency and resilience (Ulanowicz et al 2009). Recognizing the difficulty of reforming any legal structure (Weeks and Smith 2018, p.10), in subject areas that are as opaque and dominated by strong incumbent lobbies as money, finance and banking currently are (Amann 2011; Schroeder 2017), Section 5 will make a case for a definition of “money” and “currency” that can unite theory and practice and be incorporated into financial policy and laws with only “minimally invasive” changes. With regard to an assumed readership outside the legal disciplines, laws and statutes are here referenced in a way that makes it easy to find and verify their source
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