Current Monetary System Research Articles

Community Currencies for a More Just and Equitable Society

To address systemic inequalities in our world, we need to re-imagine money, how it flows, and how it can be used as a tool for prosperity rather than a tool that deepens economic and social divides within communities. Most current monetary systems reward extractive tendencies, disassociating us from each other and from nature. These maladaptive systems alienate and suppress vulnerable communities, defining their value to society in reductive economic terms. Consequently, other inherent skills and resources that a community offers are overlooked. This article explores how community currencies, defined as local forms of exchange designed to support and strengthen local economies, can be tools for shared prosperity. It examines how these new social technologies have the potential to redesign how money flows in a more holistic and beneficial way.

US Dollar Dominance in International Trade and the Impact of Trump’s Policies

This paper delves into the status of the US dollar as a world reserve currency and its profound impact on China's economy. It emphasizes the significance of capital account convertibility for governments and advocates the necessity for reform in the international monetary system. The study sheds light on China's remarkable economic growth and its reliance on the US dollar, while also exploring the emergence of an alternative currency basket featuring the Chinese yuan (RMB). With the gradual depreciation of the US dollar on the horizon, the potential consequences for China's economy are thoroughly examined.Additionally, the paper addresses the risks associated with de-dollarization and the potential flight of USD-denominated debt to alternative assets like gold. A detailed analysis of how Trump's economic policies, especially the trade war with China, have impacted the global role of the US dollar is presented. Furthermore, the paper provides a comprehensive historical review of the international monetary system, spanning from the gold standard to the Bretton Woods system and the Jamaican system. It critically discusses the flaws and instability inherent in the current system, including issues related to currency over-issuance and the multi-currency reserve system.In conclusion, the paper examines the policy signals of the Federal Reserve and the US Treasury, along with the ramifications of Trump's economic policies on the US dollar and the global economy. The findings underscore the urgent need for measures to address the challenges posed by the current monetary system and its potential impact on China's economy. The study advocates for a proactive approach to international monetary system reform to ensure economic stability, promote balanced global economic growth, and address the complexities arising from the dominant status of the US dollar as a world reserve currency.

A basic macroeconomic agent-based model for analyzing monetary regime shifts.

In macroeconomics, an emerging discussion of alternative monetary systems addresses the dimensions of systemic risk in advanced financial systems. Monetary regime changes with the aim of achieving a more sustainable financial system have already been discussed in several European parliaments and were the subject of a referendum in Switzerland. However, their effectiveness and efficacy concerning macro-financial stability are not well-known. This paper defines the economic requirements for modeling the current monetary system and introduces the corresponding macroeconomic agent-based model (MABM) in a continuous-time stochastic agent-based simulation environment with a provenance model. This MABM aims to present a starting point for exploring and analyzing monetary reforms. In this context, the monetary system affects the lending potential of banks and might impact the dynamics of financial crises. MABMs are predestined to replicate emergent financial crisis dynamics, analyze institutional changes within a financial system, and thus measure macro-financial stability. The used simulation environment makes the model more accessible and facilitates exploring the impact of different hypotheses and mechanisms in a less complex way. Moreover, the model replicates a wide range of stylized economic facts, which validates it as an analysis tool to implement and compare monetary regime shifts.

The Real Tragedy of the Commons – Garrett Hardin (1968) Revised

Garrett Hardin’s seminal 1968 paper describes the tragedy of the commons in terms of common goods being neglected or overused. His theory has been widely adopted. However, it refers only to a special case, when inadequate public goods have to compete with the maximisation of private yield. The real tragedy of the commons is not that it is overused or neglected, nor is it any free-rider and spillover effects it gives rise to, but rather the underlying financial incentives and disincentives that prevent an adequate supply. Consequently, the misalignment between our current monetary system and the global commons has led to the latter’s erosion and partial destruction. Introducing a new monetary and fiscal policy of strategic triangulation can provide an adequate tool to finance our commons. With their ongoing central bank digital currency (CBDC) initiatives, regulators and central banks can offer a direct monetary mechanism to overcome this tragedy of the commons.

Decolonising money: learning from collective struggles for self-determination.

As a reflection of our politically engaged research, this paper addresses the multiple challenges of transforming money for the emergence of the Pluriverse, arguing that practical efforts of emancipation and autonomy need to dismantle the colonial nature of our current monetary system: the flip side of the colonial state. On the one hand, we look into Chiloé, a territory marked by long-term relations of colonialism, dependency and extraction, where the arrival of monetised forms of work in extractive industries has meant the destruction of former ways of inhabiting the territory. On the other, we explore the emergence of the Circles project, in Berlin, that aims at creating a basic income from the bottom-up, whereby people in different communities issue money equally and exchange with each other without the need for state cash. More than assuming that money in itself is ‘bad’, we suggest that a recovery of the social and ecological fabric of life could be done through local money systems, designed and managed by the communities themselves, delivered and redistributed as a basic income. Moving to a plural monetary system based on relations of care would lead to a recovery of history as a project of collective self-determination.

On the Complementarity of the Austrian and Monetarist Traditions

In his article, Professor Salin focuses on two main aspects of monetary economics: first, the neutrality and stability of money, and, second, the balance of payments. Professor Salin rightly points out that monetarists in some sense follow a more pragmatic approach by trying to formulate an optimal monetary policy rule, given the current monetary system. At least some Chicago school economists are indeed open to a genuine free market in money. But there is an important element that makes economists of the Chicago-monetarist tradition more prone to opting for government involvement in the monetary system than Austrian economists. This element lies in the schools’ opposing views on methodology. The Chicago economists stand for an instrumentalist position, whereas Austrian economists stand for a realist position.

Redefining Banking Through Defi: a New Proposal for Free Banking Based on Blockchain Technology and DeFi 2.0 Model

This article aims to offer a new free banking proposal with a 100% cash ratio that uses the DeFi 2.0 model. The current monetary system, based on Central Banking with fractional reserve, has created a huge debt spiral and has distorted the entire production system, which produces deep recurring socioeconomic crises that increasingly impoverish citizens. This paper presents an innovative proposal that aims to take advantage of blockchain technology using the Defi 2.0 model. It would be a first attempt to merge centralized finance with the DeFi world, laying the foundation for a fairer and more decentralized monetary society.

FUNDAMENTALS OF NOVEL ISLAMIC MONETARY SYSTEM FOR THE CONTEMPORARY AGE

Throughout history, monetary systems have repeatedly collapsed, and new systems have emerged to redress the failed flaws. The repercussions of the current monetary system give rise to collapses in modern economic and social life. This study aims to have an Islamic proposition to remedy the flaws of the modern monetary system. The money can be created based on production and work effort in the supply chain starting from a licensed warehousing system. It has been inferred that Electronic warehouse receipts of licensed warehouses can act as an anchor for an Islamic cryptocurrency system that can perform the functions of money readily.

Generations Y and X Perception Towards Bitcoin in Malaysia

Traditionally, money served as a medium of financial transaction but now the system advances to the introduction of a new electronic payment through Blockchain technology known as cryptocurrency. The phenomenon of this cryptocurrency in Malaysia is very new and it is still in debate among Malaysians especially Bitcoin’s cryptocurrency. This research is to investigate the perception of generation Y and Generation X to Bitcoin. The research is conducted based on both primary data gathered from questionnaire and secondary data collected from valid sources. The results of the research indicate that the value of Bitcoin and the extending network of operations are considered as significant factors towards the perception towards Bitcoin, while security of Bitcoin has an opposite status. In conclusion, Bitcoin does have high potentials in the near future, and it will change the current monetary system, as it is classically known.

Distributed Ledger Technology and the Future of Money and Banking

Abstract Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. https://bitcoin.org/bitcoin.pdf outlined an alternative to the current monetary system in which banks are replaced by a peer-to-peer system to issue and transfer digital money: the Bitcoin. While Bitcoin has attracted a substantial investment volume, the system has not achieved the status of a viable alternative monetary system. However, the distributed ledger technology (DLT) underlying the payment system is being applied successfully by financial institutions and is likely to have important implications for the future of money and banking. In this paper we therefore focus on the most advanced distributed ledger application in the financial industry: R3 Corda. This paper is structured as follows. In the first section, we relate the debate about systems of money creation to the rise of Bitcoin. Next, the development of R3 Corda is discussed and the lessons learned for monetary reform. We conclude with an assessment of the scope and likelihood of monetary reform as a consequence of DLT applications by central banks.

The manifesto of money (the neutrality of money)

The vast majority of what has been written about the monetary system and its theories was developed when money was totally or partially backed by some type of merchandise. At present, commodity money no longer exists, only debt money. This paper addresses money from its transition to the current situation, through this 'manifesto of money', for the construction of a new theoretical framework that adapts to the current reality and adopting money as a real medium of exchange. This paper uses the methodology of historical review and of existing power relations in this historical moment in time called the archaeological and genealogical methodology by Foucault. Using this tool, a review of the related economic literature is made and the incongruities of the current monetary system are described. The central axis of this work is the 'neutrality of money' which is used to develop a proposal for a national currency and a proposal for an international exchange currency as the basis for the construction of a new model.

The manifesto of money (the neutrality of money)

The vast majority of what has been written about the monetary system and its theories was developed when money was totally or partially backed by some type of merchandise. At present, commodity money no longer exists, only debt money. This paper addresses money from its transition to the current situation, through this 'manifesto of money', for the construction of a new theoretical framework that adapts to the current reality and adopting money as a real medium of exchange. This paper uses the methodology of historical review and of existing power relations in this historical moment in time called the archaeological and genealogical methodology by Foucault. Using this tool, a review of the related economic literature is made and the incongruities of the current monetary system are described. The central axis of this work is the 'neutrality of money' which is used to develop a proposal for a national currency and a proposal for an international exchange currency as the basis for the construction of a new model.

An extensive review on block chain

The blockchain technology is the most recent technology in the current monetary system. Blockchain technology arranges blocks separately identified linked transaction history into a chain. As it is a chain it includes the order of blocks. It would be beneficial as it is reliable. Also, it can be making use like assured money transactions, tracing items and make cocksure of data veracity. Blockchain makes it almost impossible to hack transactions. A huge number of industries can benefit from this growing technology as it has the ability to make a cheap cost by gathering the processes and breaking form or paperwork.

Nominal contracts and the payment system

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.

The Theory of Private Money and the Problem of Positioning the Central Bank as Emission Body

The topic of the article is acute due to different factors, on the one hand, it is the 120th anniversary of F. A. Hayek, the Nobel prize winner, who was awarded for a series of works dealing with the theory of private money and on the other hand, it is a controversial standing of the Central Bank within the frames of the current monetary system. Therefore, the research includes two interconnected sections: the theory of private money put forward by F. A. Hayek and the Central Bank as an emission body. The goal of the research is to analyze the theory of private money from the standpoint of the Russian school of economic thought and to show the groundless granting of the emission function to the Central Bank in today’s conditions. The article used methods of analysis and synthesis, deduction and induction, organic sequence and others. The author came to the conclusion that such foundation of cash emission as the Central Bank reputation is groundless and even exceeds the limits of science competence, as it is based on violation of the fundamental law of the material world development, i.e. the law of conversion of matter, energy. The bank reputation cannot be estimated by anything and at the same time it cannot be compared with the volume of cash emission. The status of the Central Bank as an emission body (a bank of banks) should be transformed.

Introduction to Blockchain

The current monetary system has many issues associated with it like double spending, standard transaction fees, financial crisis, centralized power and private ledgers. Blockchain provides a remedy to all these ills by its basic structure, zero or minimal transaction fees and by providing a public ledger system which is visible to everyone who is the part of blockchain which makes it free from complications like double spending and financial crisis. Blockchain is basically a continuously growing list of records or public distributed ledger system called blocks linked and secured suing cryptography. Each block has multiple transaction details associated with it. It was introduced in the year 2009 by Satoshi Nakamoto, who is believed to be a Japanese man, born in 1974. Given the features and universal nature of the Blockchain, which include decentralized ledger system, proof of work and cryptography, one can appreciate that its implementation could result in far reaching changes in all domains.

Financial Crises in Comparative Perspective – Crisis Management and its Phenomenon of Repetition/Return

Abstract Crises cause attentiveness in our society and awaken, depending on the degree of consternation, our ongoing interest. These events include financial crises, phenomenal incidents that shock the economic world and pose significant challenges for the governments. Two crises which stand out in this context are the Great Depression in 1929 and the financial crisis in 2007/2008. In addition to the comparative approach, the paper focuses directly on the typical repetitive mechanism (“recurrent pattern of banking and sovereign debt crises” (Reinhart & Rogoff, 2011): overheating, the forming of a bubble and the bursting of the bubble, largely started in the USA. Specific aspects included in this research area are crisis management in the decades mentioned above, the role of governments and banks, as well as the observation as to which crisis can be expected next. We can conclude that the current monetary systems led by complex financial instruments and addicted to low interest rates are prone to deliver another serious financial crisis.

Critical Review: Future of Block Chain Economy in Financial Services

This research paper is based on the future of block chain economy in financial sectors and its significant usage. The researcher emphasized that the block chain technology has the potential to disrupt financial services and it can change the current face of financial Industry. The researcher focused on the significant usage of block chain economy to fraud detection, to maintain the customer’s history, trade finance, and smart contracts. There are some challenging faces of block chain economy towards adoption in financial sectors such as interoperability, privacy, energy consumption, security, scalability, and legal regulations. The researcher also stated that block chain economy is a scenario and potential future environment in which crypto currency replaces current monetary systems on a global basis to become an autonomous market participants in financial sectors. The researcher also highlights the key challenges of block chain economy adoption in financial sectors with current statistics of future analysis.

Could Cryptocurrencies or CBDCs Replace the Recent Monetary Systems?

The paper highlights why, contrary to frequent claims, cryptocurrencies will not replace the existing monetary system. The reason is that despite its shortcomings the current monetary system is a product of a long evolution which had adjusted it to the needs of the economy. Cryptocurrencies will probably remain what they have been during the last decade, i.e. the popular speculative assets and the means of payment used – due to their anonymity – for illicit operations. The recent monetary system, based on deposit money issued by commercial banks, will not be replaced also by deposit money issued by central banks (Central Bank Digital Currency) as the CBDC would lack a rational mechanism of its allocation and would pose risks to financial stability

Türkiye’de Muhasebe Mesleğinin Geleceği

<p class="ql-align-justify">When the future of the accounting profession is mentioned, it is generally thought that technological developments will reduce the need of labor force. This is correct for many aspects. However, the future of money is more important than this issue. Each coinage and paper money system has created a distinctive culture that differs significantly from all previous systems.&nbsp;In recent years, with the effect of digitalization and technological developments, the whole world is in the third stage of the history of money: the age of electronic money and the virtual economy. The integration of computer usage into our lives, the acceleration of globalization and the neo-liberal policies adopted by developed countries have increased the need for a common electronic currency. With the rise of electronic money, it is inevitable that society will undergo radical and wide-ranging changes. Electronic money will bring fundamental changes to political systems, the nature of trade organizations and class organization. <p class="ql-align-justify">In this study, the historical development of monetary systems is explained and the effects of inflation on the current monetary system are examined.&nbsp;The way in which the electronic money system affects economic and social life is discussed and suggestions for the future are given.&nbsp;There are no journal entries without money, no accounting without journal entries, no financials without accounting, no companies without financials, no economy without companies, no life without economy.&nbsp;