Tag Archives: Monetary system

“Vollgeld, the Blockchain, and the Future of the Monetary System”

Presentation at the Liechtenstein Institute about the Vollgeld initiative, the blockchain revolution, and their possible effects on banks and the monetary system.

Report in Liechtensteiner Vaterland, February 1, 2017. HTML.

Interview in Wirtschaft Regional, February 4, 2017. PDF.

Switzerland will Vote on “Vollgeld”

group of Swiss citizens lobbying for monetary reform has succeeded: after collecting more than 100,000 signatures a referendum will have to be held in the next years. In the ballot, Swiss citizens will vote on no more or less than the future of the monetary system in Switzerland.

According to the group’s proposal inside-money creation by banks will eventually be prohibited. Deposit claims vis-a-vis commercial banks would be transformed into claims vis-a-vis the central bank and deposit liabilities of commercial banks would be transformed into liabilities of those banks vis-a-vis the central bank. Within a certain time span, commercial banks would have to repay those liabilities. Moreover, they would be prohibited from ever creating deposits again—that is, all money should be base money.

Here are previous blog posts on the topic: the initiative; comment; narrow banking proposals; Icelandic debate.

Update: Discussion by Alex Tabarrok in a marginal revolution post.

“Institutionelle Schwächen der EU (Institutional Problems in the EU),” FuW, 2015

Finanz und Wirtschaft, July 15, 2015. PDF. Ökonomenstimme, July 16, 2015. HTML.

The collapse in Greece is a consequence of major institutional problems:

  • Political decision makers in Berlin, Paris, Brussels, Frankfurt and Washington didn’t follow the rules. This seemed optimal ex post, but is suboptimal ex ante (see Kydland and Prescott).
  • The ECB’s mandate is unclear.
  • The monetary system is fragile.

Macroeconomic Policy

In a Vox column, Olivier Blanchard distills ten takeaways from an IMF conference on “Rethinking Macro Policy. Progress or Confusion?’” He lists them under the following headings:

  1. What will be the ‘new normal’?
  2. What the new normal will be matters a lot for policy design
  3. Can we hope to limit systemic financial risk?
  4. Should monetary policy go back to its old ways?
  5. Instrument rules
  6. Macroprudential tools or financial regulation
  7. Should central banks keep their independence?
  8. Little progress on the design of fiscal policy
  9. The complex effects of capital flows
  10. How much can the international monetary system be improved?