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Global Money for the Poor

Perhaps remittances today are what the small-coin debasement was for the medieval monetary system: an incomplete and temporary cure for the shortage of money. What is really needed is an effective and reliable means of international payment to provide cross-border liquidity for the poor.

SÃO PAULO – In 2002, the Nobel laureate economist Thomas Sargent and François Velde, now a senior economist at the Federal Reserve Bank of Chicago, published The Big Problem of Small Change. The book’s title was inspired by the observations of economic historian Carlo Cipolla on the functioning of the medieval commodity-money system – particularly its persistent failure from the twelfth century onward to prevent shortages of small-denomination coins used mainly by the poor.