Our introductory session on money highlights a number of points, including
- money as symbolic of civilisation: the dominance of voluntary, commercial exchange over violence; the emergence of respect for the rule of law and property rights
- the State (democratic or autocratic) has always played a huge role in supporting the “moneyness” of money
- money is typically an IOU (though there are exceptions) and so fundamentally depends on trust
By way of illustration, a little-known ceremony in London – dating back to the 13th century – takes place each year. So, in addition to taking a look at the above video, check out the following references if you’re still not convinced that money is steeped in history and politics.
Needless to say, the lecture will cover more contemporary examples of how the State uses money and its supporting infrastructure not just to achieve core objectives such as financial and monetary stability but also to help enforce the law and pursue foreign policy.
Money comes in many shapes and sizes: physical or digital, privately or publicly issued; widely or narrowly available; and with transfer systems that can be centralised (“traceable” bank deposits) or decentralised (“anonymous” peer-to-peer bitcoins). Textbooks generally focus on money that is an asset for the holder with a corresponding liability somewhere else in the system (a central bank if it is dollar bills or a commercial bank if it is an electronic bank deposit).
However, popular interest – but not participation – is currently engaged by new, disruptive, quasi-money. Bitcoins, like many of their cryptocurrency rivals and other commodity-style moneys, are not the liability of anyone else. It can all get rather confusing. As such, I highly recommend you read a recently published article from the BIS (Bank for International Settlements) which contains some illuminating “flower” visualisations.
The article also discusses
- issues that central banks need to consider, should they decide to introduce their own cryptocurrencies
- some key technical drawbacks with the blockchain system (which is just one type of distributed ledger technology)
Like any product, money has its price. Indeed we shall unveil four prices to choose from. One is the exchange rate and we shall take the opportunity to review currency markets and how not to get confused by foreign exchange quotations. As we look at the grand historical sweep of global currencies over millennia we shall see once more that power, politics and money are inextricably linked.
8 Sep 2019