Shining a Light on Shadow Money

Abstract

In his superb new book, "The Money Problem: Rethinking Financial Regulation," Morgan Ricks meticulously and persuasively argues that financial stability and money creation are two sides of the same coin. Understanding this relationship yields an immensely important policy payoff. By controlling and guaranteeing what counts as money, the government can solve the problem of financial panics, with all their untoward consequences. Ricks proposes several simple reforms to achieve this result. His proposal may seem radical, but he makes a compelling case that it is both feasible and desirable.

Keywords: financial reform, financial crisis, shadow banking, money, banking law