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On Ensuring the Acceptability of a New Fiat Money

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  • Selgin, George A

Abstract

Currency reforms of the type now being contemplated by some former Soviet republics, aimed at establishing new fiat monies linked to established currencies through fixed exchange rates, carry an inherent danger. Such reforms may, by neglecting certain requirements crucial for ensuring the acceptability of a new currency, cause it to be treated by the public as so many 'bits of paper.' Analyzing this problem serves to highlight some shortcomings of Patinkin-style Walrasian monetary ananlysis, which ignores money's character as a social institution and downplays the role of expectations in determining a would-be money's acceptability, thereby giving support to misguided reform efforts. In this respect, at least, some early non-Walrasian monetary theories are more enlightening. Copyright 1994 by Ohio State University Press.

Suggested Citation

  • Selgin, George A, 1994. "On Ensuring the Acceptability of a New Fiat Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 808-826, November.
  • Handle: RePEc:mcb:jmoncb:v:26:y:1994:i:4:p:808-26
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    Cited by:

    1. Peter J. Boettke & Christopher J. Coyne & Peter T. Leeson, 2015. "Institutional stickiness and the New Development Economics," Chapters,in: Culture and Economic Action, chapter 6, pages 123-146 Edward Elgar Publishing.
    2. Tatom, John & Ott, Mack, 2006. "Money and Taxes: The Relationship Between Financial Sector Development and Taxation," MPRA Paper 4117, University Library of Munich, Germany.
    3. Sébastien LOTZ & Guillaume ROCHETEAU, 2000. "Launching of a New Currency in a Simple Random Matching Model," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 00.10, Université de Lausanne, Faculté des HEC, DEEP.
    4. Gerald P. Dwyer & James R. Lothian, 2002. "International money and common currencies in historical perspective," FRB Atlanta Working Paper 2002-7, Federal Reserve Bank of Atlanta.
    5. Gerald P. Dwyer & James R. Lothian, 2003. "The economics of international monies," FRB Atlanta Working Paper 2003-37, Federal Reserve Bank of Atlanta.
    6. George Selgin, 2010. "The Secret of the Euro's Success," Econ Journal Watch, Econ Journal Watch, vol. 7(1), pages 78-81, January.
    7. Horwitz, Steven, 2011. "Do we need a distinct monetary constitution?," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 331-338.
    8. Dwight R. Lee, 2001. "The Internet, the Market, and Communication: Don't Ignore the Shoe While Admiring the Shine," Cato Journal, Cato Journal, Cato Institute, vol. 20(3), Fall.
    9. George Selgin, 2003. "Adaptive Learning and the Transition to Fiat Money," Economic Journal, Royal Economic Society, vol. 113(484), pages 147-165, January.
    10. van Ees, Hans & Garretsen, Harry, 1995. "Existence and stability of conventions and institutions in a monetary economy," Journal of Economic Behavior & Organization, Elsevier, vol. 28(2), pages 275-288, October.
    11. repec:jpe:journl:1460 is not listed on IDEAS
    12. Joshua R. Hendrickson & Thomas L. Hogan & William J. Luther, 2016. "The Political Economy Of Bitcoin," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 925-939, April.
    13. Von dem Berge, Lukas, 2014. "Parallel currencies in historical perspective," CAWM Discussion Papers 75, University of Münster, Center of Applied Economic Research Münster (CAWM).
    14. Mack Ott & John A. Tatom, 2016. "Government Finance and the Demand for Money—The Relation between Taxation and the Acceptability of Fiat Money," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 45(1), pages 53-77, February.
    15. Mack Ott & John A. Tatom, 2006. "Money and Taxes - The Relation Between Financial Sector Development and Taxation," NFI Working Papers 2006-WP-09, Indiana State University, Scott College of Business, Networks Financial Institute.
    16. repec:eee:jeborg:v:141:y:2017:i:c:p:188-195 is not listed on IDEAS
    17. van den Hauwe, Ludwig, 2006. "The Uneasy Case for Fractional-Reserve Free Banking," MPRA Paper 120, University Library of Munich, Germany.
    18. Ben Fung & Hanna Halaburda, 2016. "Central Bank Digital Currencies: A Framework for Assessing Why and How," Discussion Papers 16-22, Bank of Canada.

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