Money's Design Elements: Debt, Liquidity, and the Pledge of Value from Medieval Coin to Modern "Repo"

Banking and Finance Law Review, v. 38 (2022 Forthcoming)

Harvard Public Law Working Paper No. 21-31

23 Pages Posted: 9 Aug 2021 Last revised: 28 Oct 2021

Date Written: August 1, 2021

Abstract

Across the ages, moneys exhibit a recurring set of design elements: they are made of debt; that debt is specifically fashioned to create liquidity; and the debt medium that results comes with a pledge of value (commonly collateral, convertibility, a commitment of public faith, and/or insurance) to enhance its credibility. While those design elements appear again and again, they vary greatly in form. Debt, for example, can be structured as a straightforward liability or issued by agents (e.g., a central bank acting for a government). Every difference in design changes the dynamics of the medium and the way people treat it. Every difference in design thus affects exchange, its societal context, and how value travels. Like the law of payments, the legal design of money shapes the economy itself.

[This essay is written as part of a festschrift for Professor Benjamin Geva.]

Keywords: money design; debt; liquidity; near moneys; coin; commodity collateral

JEL Classification: Gi, G2, N1

Suggested Citation

Desan, Christine A., Money's Design Elements: Debt, Liquidity, and the Pledge of Value from Medieval Coin to Modern "Repo" (August 1, 2021). Banking and Finance Law Review, v. 38 (2022 Forthcoming), Harvard Public Law Working Paper No. 21-31, Available at SSRN: https://ssrn.com/abstract=3897399

Christine A. Desan (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States

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