New Forms Of Money Research Articles

Designing New Money - The Policy Trilemma of Central Bank Digital Currency

The prospect of central banks issuing digital currency (CBDC) immediately raises the question of how this new form of money should co-exist and interact with existing forms of money. This paper evaluates three different scenarios for the implementation of CBDC in terms of their monetary policy implications. In the ‘money user scenario’ CBDC co-exists with both cash and commercial bank deposits. In the ‘money manager scenario’ cash is abolished and CBDC co-exists only with commercial bank deposits. And in the ‘money maker scenario’ commercial bank deposits are abolished and CBDC co-exist only with cash. The evaluation is based on an adaption of the classical international monetary policy trilemma to a domestic monetary system with multiple forms of money. Our proposition is that a monetary system with two competing money creators, the central bank and the commercial banking sector, can simultaneously only pursue two out of the following three policy objectives: Free convertibility between CBDC and bank money, parity between CBDC and bank money, and central bank monetary sovereignty, which is the use of monetary policy for anything else than support for commercial bank credit creation. This means that the decision on the design of a monetary system with CBDC implies a crucial political decision on the priorities of the central bank.

Central bank digital currencies

Advances in technology and digitalisation are widespread and affect all facets of life, including jobs, education and social interactions. Electronic devices and high-speed networks have become practically ubiquitous, leading to the rise of the modern, digital consumer, who is positively inclined towards mobile and online platforms and is increasingly the driving force of consumption. The need for speed, convenience, round-the-clock availability and an enhanced user experience has led to significant changes in the payments space. These include the emergence of non-bank payment service providers, private cryptocurrencies and real time gross settlement (RTGS) enhancements. These changes have prompted many central banks to study the possibility of a central bank digital currency (CBDC) as a payment token and the impact it could have on their economies. Electronic central bank-based currencies have been in place for decades. They are in the form of banknotes and serve as reserve balances that banks and participating financial institutions maintain with central banks. The latter are used for interbank settlements. CBDC is a potential new form of money, issued digitally by the central bank and intended to serve as legal tender. Given that these are government-issued legal tender, CBDCs will need to be backed by government debt. This paper aims to provide an understanding of the concept of CBDCs, the case for and against CBDCs and the CBDC experiments worldwide that explore central bank investigations around CBDC usage.

Modern Money and National Debt

The article identifies the features that distinguish the universal use-value from the special consumer value, which allowed to solve the problem of classification of some forms of money as “complete” or “inferior”. It has been determined that universal use-value, in contrast to the special consumer value, reflects, first of all, relations between people, but not between a man and nature, exists only in commodity production relations and is not destroyed when consumed. Thus, money as a universal use-value should not be reproduced as ordinary goods, so its exchange value or purchasing power is not determined by labor costs for its production. This is true both for modern money and for gold money in the past, which also had insignificant “internal” value. Thus, it is necessary either to attribute gold money to “inferior”, or to recognize that the division of money into “valid” and “invalid” has no clear grounds for it. Modern money, in its turn, is not new production relations in comparison to gold money, it is not a new entity, but a new form of money. It has been proved that modern fiat money should not be regarded as the central bank debt obligations, because it is not such by its nature. Because of this, the existing credit mechanism for the emission of modern money and the growth of public and private debts, caused by such a mechanism of emission, is not necessary.

From an Emerging Economy Perspective: Central Bank Digital Currency Analysis of Turkey

Digitalization of the world brought about a change in many aspects, interactions switched to digital technologies from the analogue ones. Businesses have been reshaped and new value-producing opportunities have occurred. For sure money, as one of the most important realities of life, is enforced to change. New forms of money have been developed in time and money has adapted itself to the changing world since the time it was invented. Even though fundamental functions of money do not change, the form of money evolves to respond to the needs of individuals over time. Today, money is expected to be more convenient for everyone and digitalization enables this change.

Trends and Prospects for the Development of Blockchain and Cryptocurrencies in the Digital Economy

M. Vasyunina6 The main aim of this article is to analyze the prerequisites for the development and the promotion of cryptocurrencies, covering the period from the emergence of the first forms of money to recent period. The paper focuses on findings of comparative analysis of consumer value of precious metals, cash and non-cash money and cryptocurrencies as different forms of money. The authors provide comprehensive descriptions and expert quantitative estimates for each of the listed forms of money, as well as determine the place of cryptocurrency in the modern financial system as a means of payment. The research presents a detailed analysis of the advantages and disadvantages of new technologies. The paper defines the status of cryptocurrencies in various countries of the world and names promising development trends. The authors determine the main obstacles hindering the circulation of cryptocurrencies in certain markets and assess the risks and prospects associated with the introduction and use of cryptocurrencies as a new form of money which aims at full/partial replacement of fiat money in the modern financial system. As a conclusion it is noted that weak integration into the financial system is the main obstacle to major distribution of cryptocurrencies as a means of payment.

Prospects for Using Cryptocurrency in the Economy of Kazakhstan and the Attitude of the National Bank

The modern stage of the evolution of money is associated with the development of virtual economy as part of the global economic system based on interactive business on the ground of information technologies. The development of new forms of money is due to the activation and deepening of the information sphere and information society. Due to such conditions and the impact of technological innovation, economic science acquires a new meaning; significant changes take place in all spheres of economic activity, including the financial sector. The manifestation of such changes is the transfer of transactions into the electronic format, the emergence of new means of payment, the latest payment instruments and systems. The paper considers the main features of cryptocurrencies, with attention to the most popular and widespread of them - Bitcoin. Based on the expert survey and literature, the attitude of the central banks of foreign countries and the National Bank of Kazakhstan regarding the recognition and regulation of cryptocurrency have been analyzed, and conclusions about the prospects for using cryptocurrency in Kazakhstan have been made.

A 9-Dimension Grid for the Evaluation of Central Bank Digital Currencies

Blockchain technology offers new opportunities for the development of central bank digital currencies (CBDCs). Although discussion on the matter is still in its early stages, researchers and practitioners have proposed possible frameworks via which to explore the potential of this new form of money for central banks and governments. Since blockchain technology is very broad, central banks can conceive of many different blockchain types to sustain CBDC, and the decisions taken by a central bank at a technical level determine the economic possibilities of the resulting monetary system. In other words, the technical attributes of a blockchain have crucial implications for the monetary system that such a blockchain might sustain. In this article, we propose a grid that identifies nine fundamental technical dimensions to be assessed by central banks when establishing a digital currency system based on blockchain technology, and that analyzes the different implications for the central bank as it moves through each of the identified dimensions. Our objective is to offer this grid as a tool to aid in the structured, conceptual, and technical development of national currencies based on blockchain. By way of illustration, we use the grid to analyze three practical scenarios that significantly vary in their implications for the monetary system.

Property in People and the Complexities of Capitalism (SHEAR)

My years of research on the emergence of slavery in the British Empire not only supports the argument that all markets are regulated, but shows that the character of that regulation can lead to an extraordinary form of capitalism, a form that strikes at the heart of the idea of free markets. This paper explores the dilemma of slavery in the seventeenth century British Empire focusing on questions of its legality and the implications of that legality for finance. Without the ability to maintain that a person could be property, attempted claims at ownership or sale were often legally dubious, difficult to maintain and impossible to finance. England’s Royal African Company—run by the king’s own brother, James, Duke of York, went bankrupt as a consequence in 1667. The paper shows how England’s high court stepped in to legitimate the legal process of treating people as property, and explains its impact on finance and trade in enslaved people across the empire. It then connects those court decisions to the military force necessary to uphold them, and argues that there is no such thing as a “free market” in forced labor, and that all markets have to be regulated and the rules of exchange enforced. While slavery is perhaps the most crucial example of how such regulation works, this case study from the era of its emergence illuminates how modern assumptions about free markets seriously underestimate the ways in which different regulation combined with the instruments of political power can create radically different kinds of society. Of course slavery was part of capitalism—and an important part—in nineteenth century America. But slavery did not define capitalism. Nor was slavery only capitalism; as an examination of its origins reveals, it was in many ways part of an older ideal of hierarchical society that contemporaries called feudalism and that had very particular legal expression. In this paper I explore the origins of slavery in England’s 17th century empire to argue that “property in people” was a concept that to flourish needed a very particular legal basis, one that built on feudal law but then took a dramatic turn towards fictionalizing people as property. Once such a basis was created, it created almost a new form of money and credit. Without such a legal definition, slavery was profoundly unstable.

Banking in the Digital Age - Who is Afraid of Payment Disintermediation?

Throughout the ages, banks have evolved as intermediaries taking deposits of funds, lending money, and providing payment services. In the process they became also suppliers of commercial bank money, now only in the form of bank deposits. Following a historical review as to how money changers and goldsmiths became bankers, the paper points out that money and payment digitization has brought some challenges to the traditional role of banks as intermediaries. First, the digital age is about to facilitate the availability of central bank money balances or their equivalent to the public. Second, cryptocurrencies and blockchains were born. Third, claim-check centralized digital currencies have been created. This paper argues that availability to the public of central bank money, in the form of either full-reserve banking or plain sovereign money, is unlikely to affect the role of banks other than in money creation. The paper goes on to argue that cryptocurrencies are mostly not a new form of money and that in essence blockchains do not pose a major threat to the traditional interbank settlement system; at most they spur improvements in legacy systems. Finally, the argument goes, the creation of claim-check centralized digital currencies will give banks enough space to continue their role in providing payment services and even create alternative currencies fully backed by fiat ones. Ultimately banks will retain their role as intermediaries; Fintech does not have a payment services model which will supersede banking so that, in order to competitively provide payment services, IT firms will have to become banks.

The Double Embeddedness of Bitcoin: Insights from Old and New Economic Sociology

Revisiting analytically the notion of embeddedness and its connections with the concept of trust, this paper shows that contrary to Bitcoin’s premises and promises to be a trust-low or even trust-less currency, trust enters the system at many various levels and with different nuances. Applying a conceptual framework that conceives embeddedness as both the possible source and outcome of trust, it is pointed out that Bitcoin should better be regarded as doubly embedded: in technology and in its peculiar social structure. Due to the existence of computational and cognitive asymmetries within the system, in fact, trust is necessary for the very functioning of this new form of money, as well as for its future prospects.

Money after Blockchain: Gold, Decentralised Politics and the New Libertarianism

ABSTRACTBlockchain technologies are central to what has been described as a new ‘smart social contract’. With blockchain, individual cryptographic identity becomes the basis for new forms of money and for a whole suite of restructured social, political and financial transactions. But what do these developments signal for feminist engagements with the money economy? The transparency and pseudonymity that the blockchain provides has been welcomed as a ‘feminist weapon’. But the decentralised technology also legitimises many longstanding assumptions of libertarianism, especially competitive individualism, naturalised social inequality and the stability of value associated with the gold standard. Drawing on popular culture texts, Goldfinger and The Mandibles, this article considers this history, examining the gendered, racialised and sexualised discursive practices that attend representations of gold along with the ‘metallism’ surrounding blockchain-based cryptocurrencies in the contemporary conjuncture. By claiming to represent non-negotiable certainty derived from technology/nature rather than social convention, the fantasy of fundamental value returns, together with related associations of essentialism and authenticity, but anchored in this new context in the technocratic authoritarianism of FinTech. This is part of the background for the ‘new libertarianism’ whose ascendency now overshadows the neoliberalism that has been the focus of critical attention for some decades.

Money That Isn’t: A Qualitative Examination of the Adoption of the 1 Pesewa Coin and Biometric Payment Cards in Ghana

The introduction of a new form of money into society can be deemed successful if it is adopted and integrated into the daily financial practices of a large part of the society. In other words, both central banks and the general society play a role in money objects becoming money. On occasion, social rejection of new money objects occurs, such that official legal tender is not accepted or put to use as a medium of exchange in financial transactions, resulting in financial deadweight. Using qualitative data on coin use subsequent to Ghana’s 2007 redenomination of the Cedi as well as the introduction of the e-zwich card, an electronic payment system, this paper explores two such cases of social rejection of a money object. Due to the role that society plays in adopting money objects, attempts to encourage adoption of money objects must include bottom up strategies.

Money That Isn’t

The introduction of a new form of money into society can be deemed successful if it is adopted and integrated into the daily financial practices of a large part of the society. In other words, both central banks and the general society play a role in money objects becoming money. On occasion, social rejection of new money objects occurs, such that official legal tender is not accepted or put to use as a medium of exchange in financial transactions, resulting in financial deadweight. Using qualitative data on coin use subsequent to Ghana’s 2007 redenomination of the Cedi as well as the introduction of the e-zwich card, an electronic payment system, this paper explores two such cases of social rejection of a money object. Due to the role that society plays in adopting money objects, attempts to encourage adoption of money objects must include bottom up strategies.

Back to the Future? Evolving Forms of Money

This paper looks at the emergence of new forms of money, mostly as a result of technological advancements in the internet as well as mobile telephony. The paper uses Bitcoin and mobile money to analyses new evolving forms of money. It uses a framework based on the characteristics of fiat money to analyses these emerging forms of money. Interestingly, these two forms of money epitomises the North-South divide. Bitcoin is predominantly a global ‘North’ type of money while mobile money is typically a sub Saharan or global ‘south’ type of money. This research has the potential to influence how regulators respond to evolving and new forms of money. It further has the potential to depend understanding of these new forms of money. This is critically beneficial to the ecosystem formed by this money (users, vendors, banks, regulators). The paper argues that the emerging forms of money are here to stay and that there is need for a new legal and institutional approach to the regulatory framework of these emerging forms of money. Looking at how money has evolved over time, the paper advocates for a broader perception of the concept of money; mostly based on how money developed out of the marketplace.

A free market capitalism or a speculative market capitalism?

PurposeThe purpose of this paper is to explore the interaction between the economic and political imperatives of new monetarism. The breakdown of the global derivatives markets, which came into the spotlight during the 2008/2009 global debt crisis, brought up the issue of trust. The matter at hand is the loss of trust in investors' ability to make informed decisions, but trust in the self‐regulating capacity of open markets has also been seriously shaken.Design/methodology/approachRelying on Roche and McKee's analysis of the global financial crisis, the author emphasizes that new monetarism is not a new paradigm, but rather a result of economic circumstances. Although the growth of financial asset prices was indeed partly a result of the liberalization of financial markets, the decisive factor is to be found in the creation of new financial instruments. On the one hand, derivatives have drastically increased the “investment power” or “purchasing power” of money. However, on the other hand, derivatives are a form of under‐appreciated liquidity that creates bubble assets.FindingsOver the last two decades, the value of global financial assets has grown much faster than the real economy in its background, which means that in the era of new monetarism, financial markets set the tone of the real economy. Consequently, in the eyes of investors, the crucial term becomes “liquidity”, rather than “real economy”. As disinflation multiplied the value of financial assets, central banks progressively lost control of money. Players in financial markets that had increasing trust in cheap money started to introduce new forms of money, which allowed them to create liquidity, independently of the central bank. It has been shown that the quantity and cost of money available for investment can be frozen up to a point where it threatens the global financial system.Practical implicationsNetworks for promoting social responsibility of the corporate sector, which more and more tightly cover our small planet, wish to make transparent the connections between corporate leaders, politicians and organizations to which they are connected. Their members conduct research with the aim of making the invisible power of money visible.Originality/valueNew financial democracy in the post‐modern era presupposes financially literate citizens, which without a doubt presents a challenge for education systems, which will evidently have to incorporate a new, crucial form of literacy, in addition to linguistic, mathematical and computer literacy – financial literacy.

Lampooning the Paper Money Custom in Contemporary China

Over the past millennium and across the length and breadth of China and beyond, people have been burning paper replicas of the material world to send to their deceased family members, ancestors, and myriads of imaginary beings. The paper replicas, which include all types of goods and treasures, mostly old and new forms of money, is commonly referred to as the paper money custom. Studies of the paper money custom have neglected the native opposition to it, especially that of the contemporary intelligentsia, one form of which consists of news reports and human interest stories in the popular press that lampoon the practice of burning paper money. Many stories lampoon the paper money custom by showing how it burlesques traditional virtues such as filial piety. One of the interesting maneuvers in this criticism is how it employs the old and newer kinds of paper monies to shape the response of the readers.

The Massachusetts Paper Money of 1690

Modern currency originates in the inconvertible, legal tender paper money that Massachusetts devised in 1690. The circumstances that led to its creation are more complex than the typical story of wartime specie shortage. Due to temporary political constraints of that turbulent period, the currency could be neither backed by land nor imposed on anyone, as was then standard. Instead, it had to be disguised from England as a simple, private-seeming IOU. By pleasing both its pay-demanding troops and England, the government maximized its probability of survival subject to the constraints.“Monetary innovation, the development of new forms of money, has not received much systematic study from economic historians.”1

Does Law Follow Money?

When new forms of money are introduced, do the laws of the countries or communities in which they originally developed follow in the wake of the new forms of payment?

E-money Development Within Contemporary Economies

Development is the upward directional movement of society from lesser togreater levels of energy, efficiency, quality, productivity, complexity, comprehension,creativity, enjoyment and accomplishment. These attributes are both the means for achievingdevelopment as well as its most characteristic expressions or results. Money has played a parallel role at the social level as a medium for urbanization,multiplying economic activities by several orders of magnitude. The forms money has takenon over centuries have always been closely connected with the technological developments inthe economy. As simple economies evolved into more complicated economies, money hasalways adapted to the different economic circumstances. With respect to the latest innovationsin the computer industry a new form of money has evolved: e-money.

Monnaie électronique, monnaie fiduciaire et monnaie scripturale. Quelles substitutions ? Quelles stratégies ?

Electronic money, cash and non-cash money. What substitutions ? What strategies ? Electronic money is a new form of money which is subject of special regulations at European and national levels, but the nature of which remains finally unclear or ambiguous, to the extent that this new kind of money is neither cash nor non-cash. Accordingly, this article tries to answers five questions : To what extent this new instrument is going to replace the other forms of money ? Is this substitution justified and what is its contribution ? What is its impact on European monetary policy ? What issues to deepen to favour its general implementation in a short term ? What is its place in the Single Euro Payment Area (SEPA) ? These issues are important to deepen to create positive dynamics and to sustain electronic money. Classification JEL : E41, E59