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Symposium 2014

The Future of Global Money

The Challenge

The current way of providing a means of exchange, i.e. a fractional reserve fiat money system, is not the only way. Monetary regimes with nationalized money are prone to misuse by those who control them. At present, monetary authorities, in an attempt to stabilize financial markets, have increased their monetary bases to an extent as yet unseen. But, will they be able to absorb this liquidity if it should become necessary to keep inflationary pressure under control? The longer the money press is used to fight problems that are non-monetary by their very nature, the more money users will become aware of the potential risks, and the more likely they will be to look for means of exchange other than legal tender. However, increasing demand for new money alone is not enough. Potent entrepreneurial players on the supply side are also required. Technologies become more important in reducing the cost of transfers and currency exchange: electronic payment systems may not only substitute coins and bank notes, but will also simplify the handling of multiple currencies by offering integrated network bridges. From the start, this money would be truly global and would make full use of the network-good characteristics of a universal medium of exchange and would be free from direct policy control. Bitcoins show that people around the world are already searching for alternative means of payment that are no longer restricted by state frontiers. Currently, electronic money is still linked to legal tender, but this may change. Clearly, such an alternative monetary framework will have dramatic impacts on the way our economies operate.

How important is the fractional reserve privilege granted to commercial banks that implies extremely elastic credit creation and destruction? Is this elasticity an enabler for economic growth or an economic destabilizer?

Can free banks produce money that is more useful than today’s fiat money? What are the regulatory requirements for free banks? Is free banking more robust because it is less complex or is the overall vision unrealistic thinking?

What would be the most suitable reserve medium for global free banking? Will gold—made digitally fungible—become the money of the world again? What are the transition scenarios? Does free banking depend on a physical reserve media at all or are purely virtual currencies (like Bitcoins) workable alternatives?

Today, central banks play a crucial role in macroeconomic management: Is the world ready for an era without monetary policy? Who are the losers and winners in such a scenario? What are the implications of sticking to the current system? Is there a tacit tendency towards the emergence of a world central bank? Would this agency be a new source of international conflict and are global free banks a way to avoid this?

How will governments respond when private companies challenge their money monopoly? Will they grant them the necessary protection of the civil laws or will they rather use their rule setting monopoly to prevent the emergence of private money? Do they have a choice? Will there be strong public support for the freedom of using whatever currency individuals prefer? What does private money imply with respect to the unsolved sovereign debt overhang in many countries?

Who are the most likely big players in a global landscape of free banking? Is data mining a strong incentive for today’s digital network giants to enter the market or will specialized so far hidden champions make the race?

Free banking would leave the traditional banking industry as a financial intermediary. Are modern banks ready for this or do their business models crucially depend on the fractional reserve privilege?

    Proposals

    Proposal
    Symposium 2014

    Future of Global Money

    Over the past decade, rapid technological advancement has facilitated the proliferation of Internet and mobile based payment schemes involving some form of electronic money (e-money), as well as, virt ...

    Over the past decade, rapid technological advancement has facilitated the proliferation of Internet and mobile based payment schemes involving some form of electronic money (e-money), as well as, virtual money schemes such as Bitcoin. The commercial success of these schemes depends to what extent these schemes provide value and convenience over more traditional payment mechanisms such as cheques and credit/debit cards. The e-money schemes are a substitute for currency but not necessarily for legal tender. The virtual money schemes on the other hand are set up to be a substitute for legal tender. E-money schemes can operate across borders but

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2014

    The Problem Isn't Fractional Reserves

    There's hardly a problem that can't be solved by banning something.  A drowning at the local YMCA?  Close the pool. A car accident?  Have everyone walk. Bank runs and financial crises?  Do away wi ...

    There's hardly a problem that can't be solved by banning something.  A drowning at the local YMCA?  Close the pool. A car accident?  Have everyone walk. Bank runs and financial crises?  Do away with fractional reserve banking. The trouble with these solutions is that, to avoid bad outcomes, they also prohibit good ones.  Proposals for "100-percent" banking are no exception.  Although their proponents often seem unaware of it, fractional reserve banks play a crucial role in economic development.  Had it not been for such banks, there would be no developed economies at all; and it is thanks at least in

    Academia
    Proposal
    Symposium 2014

    Framework for a Stable Financial World

    Reinstate the seigniorage prerogative solely with central banks! Stability in a world of fractional reserve banking can only be illusory The current fractional reserve banking practice that has been i ...

    Reinstate the seigniorage prerogative solely with central banks! Stability in a world of fractional reserve banking can only be illusory The current fractional reserve banking practice that has been in place for the past many decades bestows upon banks (i.e. non-central banks) almost unrestricted powers to “create money”. Money deposited by customers with banks becomes the property of the banks. Banks then exploit this ownership right by recycling the same money base multiple times, increasing the amount of debt (liability) on their balance sheets. Measures like the Reserve Ratio, intended to serve as checks in this system, do not hinder

    Polity, Academia, Business, Civil Society

    Background Paper

    Background Paper
    Symposium 2014

    The Future of Global Money

    This fact sheet gives some background information abot the futute of global money.

    This fact sheet gives some background information abot the futute of global money.

    Polity, Academia, Business, Civil Society

    Virtual Library

    Virtual Library File
    Symposium 2014

    The Ethics of Money Production

    Reassessing the origin of money following the Mengerian tradition (stressing that money has evolved as a product of the market), Hülsmann’s analysis challenges many of the mainstream views on the ...

    Reassessing the origin of money following the Mengerian tradition (stressing that money has evolved as a product of the market), Hülsmann’s analysis challenges many of the mainstream views on the current state-controlled monetary systems showing that there are monetary alternatives typically not touched in traditional economic textbooks.

    Virtual Library File
    Symposium 2014

    Constitution or Competition? Alternative Views on Monetary Reform

    Brown’s paper delivers a thorough overview of the academic monetary reform debates of the last century ranging from the gold- standard over improved monetary rules to a free market-based monetary ...

    Brown’s paper delivers a thorough overview of the academic monetary reform debates of the last century ranging from the gold- standard over improved monetary rules to a free market-based monetary system.

    Virtual Library File
    Symposium 2014

    A Proposal for Banking Reform: The Theory of a 100-Percent Reserve Requirement (Ch. 9 in Money, Bank Credit, and Economic Cycles)

    In contrast to the Chicago-Plan, Huerta de Soto’s proposal combines 100-percent reserve requirements with free banking leaving no role for monetary policy and government interventions other than t ...

    In contrast to the Chicago-Plan, Huerta de Soto’s proposal combines 100-percent reserve requirements with free banking leaving no role for monetary policy and government interventions other than the rule of law. In his concept gold is most likely to resume the role of the key reserve medium.

    Virtual Library File
    Symposium 2014

    Neo-Austrians between Gold Standard, 100% Reserve and Free Banking

    Huber and Bagus discuss Huerta de Soto’s concept of free banking and 100-percent reserve requirements. While Huber is a representative of the New Currency Theory, Bagus clarifies many of the typic ...

    Huber and Bagus discuss Huerta de Soto’s concept of free banking and 100-percent reserve requirements. While Huber is a representative of the New Currency Theory, Bagus clarifies many of the typical objections and misunderstandings that are often put forward when it comes to the role of money in a system without central banking and new approaches to monetary systems in general.

    Virtual Library File
    Symposium 2014

    A Response to Huber

    Huber and Bagus discuss Huerta de Soto’s concept of free banking and 100-percent reserve requirements. While Huber is a representative of the New Currency Theory, Bagus clarifies many of the ty ...

    Huber and Bagus discuss Huerta de Soto’s concept of free banking and 100-percent reserve requirements. While Huber is a representative of the New Currency Theory, Bagus clarifies many of the typical objections and misunderstandings that are often put forward when it comes to the role of money in a system without central banking and new approaches to monetary systems in general.