On Money, Debt, Trust and Central Banking
31 Pages Posted: 13 Feb 2019
Date Written: January 11, 2019
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: Suggested Citation