Malignant Monetary Monocentricity

Independent Review, Forthcoming

AIER Sound Money Project Working Paper No. 2020-04

25 Pages Posted: 8 Feb 2020

See all articles by Alexander William Salter

Alexander William Salter

Texas Tech University - Rawls College of Business; American Institute for Economic Research

Date Written: January 20, 2020


I develop the idea of malignant monetary monocentricity: that contemporary central banks are systematically unlikely to deliver macroeconomic stability due to institutionally entrenched information and incentive problems. I also argue that polycentric monetary systems, best approximated by historical free banking systems, are information- and incentive-compatible in terms of delivering macroeconomic stability. I conclude by demonstrating why monetary monocentricity is incompatible with democratic self-governance, and that the only way to cure the malignancy is to replace monetary monocentricity with monetary polycentricity.

Keywords: central banking, democracy, monetary policy, polycentricity, self-governance

JEL Classification: E52, E58, P16

Suggested Citation

Salter, Alexander William, Malignant Monetary Monocentricity (January 20, 2020). Independent Review, Forthcoming, AIER Sound Money Project Working Paper No. 2020-04, Available at SSRN:

Alexander William Salter (Contact Author)

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States


American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

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