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E-barter versus fiat money: will central banks survive?

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  • F H Capie
  • Dimitrios P Tsomocos
  • Geoffrey E Wood

Abstract

New technology in computing has led some to suggest that the ability to settle transactions electronically will develop to such an extent that money will disappear from use. Two versions of this belief exist. One maintains that there will be 'e-money', issued conceivably by many organisations, and that this will replace central bank money. The other, on which this paper focuses, suggests a further development - that the very concept of a medium of exchange may become redundant, as assets or goods can be exchanged directly for other assets or goods through use of computing. In this paper we argue that the information-economising properties that allowed money to develop will also allow it to survive, despite actual and hypothesised technical progress which reduces the cost of electronic barter.

Suggested Citation

  • F H Capie & Dimitrios P Tsomocos & Geoffrey E Wood, 2003. "E-barter versus fiat money: will central banks survive?," Bank of England working papers 197, Bank of England.
    • Handle: RePEc:boe:boeewp:197
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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2003/wp197.pdf
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    References listed on IDEAS

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    Cited by:

    1. Malte Krueger, 2012. "Money: A Market Microstructure Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(6), pages 1245-1258, September.

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