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Qualified Money - A Better Financial System for the Future

14 Pages Posted: 23 Nov 2014  

Dirk Helbing

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS)

Date Written: November 17, 2014

Abstract

The current system of frictionless convertible currencies reduces the number of money-related control variables effectively to one. I argue that this one-dimensionality is the cause of the recurrent bubbles and crashes in the financial system for thousands of years. But now we can create new, complementary forms of money that enable a better self-organization of our economy. For example, “Qualified Money” would introduce reputation-dependent conversion rates to reward investments into quality. Moreover, I discuss the roots of the EURO crisis and some ideas how to overcome it.

Keywords: Bitcoin, digital currencies, reputation system, financial architecture, unfeasible control problem, multi-dimensional money with a memory

JEL Classification: E00, G00

Suggested Citation

Helbing, Dirk, Qualified Money - A Better Financial System for the Future (November 17, 2014). Available at SSRN: https://ssrn.com/abstract=2526022 or http://dx.doi.org/10.2139/ssrn.2526022

Dirk Helbing (Contact Author)

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS) ( email )

ETH Zurich - Swiss Federal Institute of Technology
Clausiusstrasse 50
Zurich, 8092
Switzerland

HOME PAGE: http://www.coss.ethz.ch

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