Accounting Meets Economics: Towards an 'Accounting View' of Money

22 Pages Posted: 22 Oct 2018

See all articles by Biagio Bossone

Biagio Bossone

BRASS on Finance, Ltd; The Group of Lecce

Massimo Costa

University of Palermo - d/SEAS

Andrea Cuccia

University of Palermo - Department of European Studies and International Integration

Giuseppe Valenza

University of Palermo - d/SEAS

Date Written: October 22, 2018

Abstract

This study lays the foundations of the 'Accounting View' of money. Using international accounting principles, the study argues that state and central bank monies are not debt, and that in fractional reserve regimes only a share of commercial bank money can be regarded as debt. The study determines how the seigniorage associated with the issuance of these monies should be accounted for in the financial statements of the issuing institutions, and examines what this implies for the correct understanding of money. The new view throws light into such issues as the true nature of central bank capital, commercial banks, and digital currencies. Drawing on it, new measurements of seigniorage are derived and applied to the case of the UK (for which recent estimates exist). The results reveal that seigniorage, in particularthat extracted by commercial banks, is a quantitatively relevant phenomenon.

JEL Classification: Central bank money and capital, commercial banks, deposits, debt, equity, seigniorage

Suggested Citation

Bossone, Biagio and Costa, Massimo and Cuccia, Andrea and Valenza, Giuseppe, Accounting Meets Economics: Towards an 'Accounting View' of Money (October 22, 2018). d/SEAS Working Paper No. 18-5. Available at SSRN: https://ssrn.com/abstract=3270860 or http://dx.doi.org/10.2139/ssrn.3270860

Biagio Bossone

BRASS on Finance, Ltd ( email )

B2, Industry St.
Qormi, 3000
Malta

The Group of Lecce ( email )

Lecce
Lecce, 73100
Italy

Massimo Costa (Contact Author)

University of Palermo - d/SEAS

Viale delle Scienze, edificio 13
Palermo, 90124
Italy

Andrea Cuccia

University of Palermo - Department of European Studies and International Integration ( email )

Via Maqueda, 324
Palermo, Palermo 90134
Italy

Giuseppe Valenza

University of Palermo - d/SEAS ( email )

Viale delle Scienze, edificio 13
Palermo, 90124
Italy

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