With cashless transactions rapidly replacing physical cash, central banks have an opportunity to serve the public interest by providing or shaping the infrastructure on which digital-payment systems are built. But to do so effectively, they will have to abandon outdated assumptions and re-imagine their own roles.
LONDON – Economics has always had a strange and much-debated relationship with money. For a long time, economists – including Nobel laureates like Merton Miller and Franco Modigliani – regarded money merely as a medium of exchange. But by building on the work of John Maynard Keynes and Hyman Minsky, economists have since moved beyond a narrow focus on the quantity of money to consider its structural influence on the real economy and the financial system.
LONDON – Economics has always had a strange and much-debated relationship with money. For a long time, economists – including Nobel laureates like Merton Miller and Franco Modigliani – regarded money merely as a medium of exchange. But by building on the work of John Maynard Keynes and Hyman Minsky, economists have since moved beyond a narrow focus on the quantity of money to consider its structural influence on the real economy and the financial system.