Monetary Reform, Central Banks, and Digital Currencies

Citation

Dow S (2019) Monetary Reform, Central Banks, and Digital Currencies. International Journal of Political Economy, 48 (2), pp. 153-173. https://doi.org/10.1080/08911916.2019.1624317

Abstract
The modern debate about monetary reform has taken on a new twist with the development of private digital currencies employing distributed ledger payments technology. In order to consider the appropriate state response, we go back to first principles of money and finance and the case for financial regulation: to ensure provision of a safe money asset and a stable supply of credit within an inherently unstable financial system. We consider calls to privatize money or to restrict money issue to the state against the background of the increasing marketization of the financial sector and money itself. Following an analysis of private digital currencies, we then consider proposals for state issue of digital currency. It is concluded that the focus of attention should instead be on updating of regulation, not only to encompass digital currencies but also to address other innovations in the financial sector that generate credit and liquidity, in order to meet the needs of the real economy.

Keywords
digital currencies; central banks; financial instability; financial regulation

Journal
International Journal of Political Economy: Volume 48, Issue 2