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Money: A Market Microstructure Approach

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  • MALTE KRUEGER

Abstract

The current discussion about the future of the financial system draws heavily on a set of theories known as the ‘New Monetary Economics’. The New Monetary Economics predicts that deregulation and financial innovation will lead to a moneyless world. This paper uses a market microstructure approach to show that a common medium of exchange that serves as unit of account will remain a necessary instrument to reduce transaction costs. This finding is supported by empirical evidence from foreign exchange markets.

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File URL: http://hdl.handle.net/10.1111/j.1538-4616.2012.00530.x
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Bibliographic Info

Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 44 (2012)
Issue (Month): 6 (09)
Pages: 1245-1258

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Handle: RePEc:mcb:jmoncb:v:44:y:2012:i:6:p:1245-1258

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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