On Money, Debt, Trust and Central Banking

31 Pages Posted: 13 Feb 2019

See all articles by Claudio E. V. Borio

Claudio E. V. Borio

Bank for International Settlements (BIS) - Research and Policy Analysis

Date Written: January 11, 2019

Abstract

This essay examines in detail the properties of a well functioning monetary system - defined as money plus the mechanisms to execute payments - in both the short and long run, drawing on both theory and the lessons from history. It stresses the importance of trust and of the institutions needed to secure it. Ensuring price and financial stability is critical to nurturing and maintaining that trust. In the process, the essay addresses several related questions, such as the relationship between money and debt, the viability of cryptocurrencies as money, money neutrality, and the nexus between monetary and financial stability. While the present monetary system, with central banks and a prudential apparatus at its core, can and must be improved, it still provides the best basis to build on.

Keywords: monetary system, money, debt, payments, trust, monetary stability, financial stability, central bank

JEL Classification: E00, E30, E40, E50, G21, N20

Suggested Citation

Borio, Claudio E.V., On Money, Debt, Trust and Central Banking (January 11, 2019). BIS Working Paper No. 763, Available at SSRN: https://ssrn.com/abstract=3329729

Claudio E.V. Borio (Contact Author)

Bank for International Settlements (BIS) - Research and Policy Analysis ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

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