K. Kıvanç Karaman, ¸Sevket Pamuk, Seçil Yıldırım-Karaman (2020), Money and monetary stability in Europe, 1300–1914, Journal of Monetary Economics (115).
At one extreme, the Dutch Republic depreciated its monetary unit by about 2.3 times, at the other, the Ottomans depreciated by about 25,000 times. These two numbers correspond to average annual depreciation rates of 0.2 and 2.5% respectively, with the other states falling in-between. … depreciations tended to be episodic. In particular, long periods of constant silver and gold value alternated with episodes of rapid depreciation in consecutive years. … There were also instances of one-off depreciations, but they were few, and at low rates. … monetary stability was not an elusive objective. Some states stabilized their monetary unit early. England did so by the mid-16th century, except for the fiat standard episode during the Napoleonic wars. Dutch Republic stabilized its monetary unit in the early 17th century, with very minor changes in the centuries that followed. France stabilized its monetary unit in 1795 following the fiat money experiment of the Revolution. In contrast to these western European states, in southern and eastern Europe, states continued to depreciate their monetary units until the end of the period.
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.
A 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.
Neue Zürcher Zeitung online, August 1, 2015. HTML. Adapted from Ökonomenstimme, July 16, 2015. HTML.
The collapse in Greece is a consequence of major institutional problems. See earlier blog post.
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.
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:
- What will be the ‘new normal’?
- What the new normal will be matters a lot for policy design
- Can we hope to limit systemic financial risk?
- Should monetary policy go back to its old ways?
- Instrument rules
- Macroprudential tools or financial regulation
- Should central banks keep their independence?
- Little progress on the design of fiscal policy
- The complex effects of capital flows
- How much can the international monetary system be improved?