IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2111.04483.html
   My bibliography  Save this paper

Revisiting the Properties of Money

Author

Listed:
  • Isaiah Hull
  • Or Sattath

Abstract

The properties of money commonly referenced in the economics literature were originally identified by Jevons (1876) and Menger (1892) in the late 1800s and were intended to describe physical currencies, such as commodity money, metallic coins, and paper bills. In the digital era, many non-physical currencies have either entered circulation or are under development, including demand deposits, cryptocurrencies, stablecoins, central bank digital currencies (CBDCs), in-game currencies, and quantum money. These forms of money have novel properties that have not been studied extensively within the economics literature, but may be important determinants of the monetary equilibrium that emerges in the forthcoming era of heightened currency competition. This paper makes the first exhaustive attempt to identify and define the properties of all physical and digital forms of money. It reviews both the economics and computer science literatures and categorizes properties within an expanded version of the original functions-and-properties framework of money that includes societal and regulatory objectives.

Suggested Citation

  • Isaiah Hull & Or Sattath, 2021. "Revisiting the Properties of Money," Papers 2111.04483, arXiv.org, revised Nov 2021.
  • Handle: RePEc:arx:papers:2111.04483
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2111.04483
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Chaum & Christian Grothoff & Thomas Moser, 2021. "How to issue a central bank digital currency," Working Papers 2021-03, Swiss National Bank.
    2. Allen, Sarah & Capkun, Srdjan & Eyal, Ittay & Fanti, Giulia & Ford, Bryan & Grimmelmann, James & Juels, Ari & Kostiainen, Kari & Meiklejohn, Sarah & Miller, Andrew & Prasad, Eswar & Wüst, Karl & Zhang, 2020. "Design Choices for Central Bank Digital Currency: Policy and Technical Considerations," IZA Discussion Papers 13535, Institute of Labor Economics (IZA).
    3. Jack Ochs & John Duffy, 1999. "Emergence of Money as a Medium of Exchange: An Experimental Study," American Economic Review, American Economic Association, vol. 89(4), pages 847-877, September.
    4. Elena Quercioli & Lones Smith, 2015. "The Economics of Counterfeiting," Econometrica, Econometric Society, vol. 83(3), pages 1211-1236, May.
    5. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2022. "Designing central bank digital currencies," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 62-79.
    6. Wallace, Neil, 2010. "The Mechanism-Design Approach to Monetary Theory," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 1, pages 3-23, Elsevier.
    7. Brunnermeier, Markus K. & Niepelt, Dirk, 2019. "On the equivalence of private and public money," Journal of Monetary Economics, Elsevier, vol. 106(C), pages 27-41.
    8. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
    9. Ferrari Minesso, Massimo & Mehl, Arnaud & Stracca, Livio, 2022. "Central bank digital currency in an open economy," Journal of Monetary Economics, Elsevier, vol. 127(C), pages 54-68.
    10. Markus K. Brunnermeier & Harold James & Jean-Pierre Landau, 2019. "The Digitalization of Money," Working Papers 2019-13, Princeton University. Economics Department..
    11. Barry Eichengreen, 2020. "From Commodity to Fiat and Now to Crypto: What Does History Tell Us?," World Scientific Book Chapters, in: Bernard Yeung (ed.), DIGITAL CURRENCY ECONOMICS AND POLICY, chapter 4, pages 17-39, World Scientific Publishing Co. Pte. Ltd..
    12. Young Sik Kim & Ohik Kwon, 2019. "Central Bank Digital Currency and Financial Stability," Working Papers 2019-6, Economic Research Institute, Bank of Korea.
    13. Michael D. Bordo & Andrew T. Levin, 2017. "Central Bank Digital Currency and the Future of Monetary Policy," NBER Working Papers 23711, National Bureau of Economic Research, Inc.
    14. repec:hoo:wpaper:e-91-3 is not listed on IDEAS
    15. Morten Linnemann Bech & Rodney Garratt, 2017. "Central bank cryptocurrencies," BIS Quarterly Review, Bank for International Settlements, September.
    16. Nosal, Ed & Wallace, Neil, 2007. "A model of (the threat of) counterfeiting," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 994-1001, May.
    17. Lagos, Ricardo, 2010. "Asset prices and liquidity in an exchange economy," Journal of Monetary Economics, Elsevier, vol. 57(8), pages 913-930, November.
    18. Yu Zhu & Scott Hendry, 2019. "A Framework for Analyzing Monetary Policy in an Economy with E-money," Staff Working Papers 19-1, Bank of Canada.
    19. Philippe Weil, 1987. "Confidence and the Real Value of Money in an Overlapping Generation Economy," Post-Print hal-03393234, HAL.
    20. Andrei Shevchenko & Randall Wright, 2004. "A simple search model of money with heterogeneous agents and partial acceptability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(4), pages 877-885, November.
    21. Oh, Seonghwan, 1989. "A theory of a generally acceptable medium of exchange and barter," Journal of Monetary Economics, Elsevier, vol. 23(1), pages 101-119, January.
    22. Matthias Doepke & Martin Schneider, 2017. "Money as a Unit of Account," Econometrica, Econometric Society, vol. 85, pages 1537-1574, September.
    23. Williamson, Steve & Wright, Randall, 1994. "Barter and Monetary Exchange under Private Information," American Economic Review, American Economic Association, vol. 84(1), pages 104-123, March.
    24. Benigno, Pierpaolo & Schilling, Linda M. & Uhlig, Harald, 2022. "Cryptocurrencies, currency competition, and the impossible trinity," Journal of International Economics, Elsevier, vol. 136(C).
    25. 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.
    26. Richhild Moessner & David-Jan Jansen & Jakob de Haan, 2017. "Communication About Future Policy Rates In Theory And Practice: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(3), pages 678-711, July.
    27. Ruchir Agarwal & Miles Kimball, 2019. "Enabling Deep Negative Rates to Fight Recessions: A Guide," IMF Working Papers 2019/084, International Monetary Fund.
    28. Kahn, Charles M. & Roberds, William, 2009. "Why pay? An introduction to payments economics," Journal of Financial Intermediation, Elsevier, vol. 18(1), pages 1-23, January.
    29. Tai-Wei Hu, 2013. "Imperfect recognizability and coexistence of money and higher-return assets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 111-138, May.
    30. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
    31. Beniak, Patrycja, 2019. "Central bank digital currency and monetary policy: a literature review," MPRA Paper 96663, University Library of Munich, Germany.
    32. Raphael Auer & Rainer Boehme, 2020. "The technology of retail central bank digital currency," BIS Quarterly Review, Bank for International Settlements, March.
    33. Taub, Bart, 1985. "Equilibrium traits of durable commodity money," Journal of Banking & Finance, Elsevier, vol. 9(1), pages 5-34, March.
    34. Isaiah Hull & Or Sattath & Eleni Diamanti & Goran Wendin, 2020. "Quantum Technology for Economists," Papers 2012.04473, arXiv.org, revised Oct 2021.
    35. Susan Herbst-Murphy, 2013. "Clearing and settlement of interbank card transactions: a MasterCard tutorial for Federal Reserve payments analysts," Consumer Finance Institute discussion papers 13-02, Federal Reserve Bank of Philadelphia.
    36. Athey, Susan & Parashkevov, Ivo & Sarukkai, Vishnu & Xia, Jing, 2016. "Bitcoin Pricing, Adoption, and Usage: Theory and Evidence," Research Papers 3469, Stanford University, Graduate School of Business.
    37. Mr. Tanai Khiaonarong & David Humphrey, 2019. "Cash Use Across Countries and the Demand for Central Bank Digital Currency," IMF Working Papers 2019/046, International Monetary Fund.
    38. Manjong Lee & Neil Wallace, 2006. "Optimal divisibility when money is costly to produce," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(3), pages 541-556, July.
    39. White, Lawrence H, 1984. "Competitive Payments Systems and the Unit of Account," American Economic Review, American Economic Association, vol. 74(4), pages 699-712, September.
    40. Brown, Paul M., 1996. "Experimental evidence on money as a medium of exchange," Journal of Economic Dynamics and Control, Elsevier, vol. 20(4), pages 583-600, April.
    41. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March.
    42. Philippe Weil, 1987. "Confidence and the Real Value of Money in an Overlapping Generations Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 102(1), pages 1-22.
    43. Metcalf, William, 2012. "The Oxford Handbook of Greek and Roman Coinage," OUP Catalogue, Oxford University Press, number 9780195305746, November.
    44. Codruta Boar & Henry Holden & Amber Wadsworth, 2020. "Impending arrival - a sequel to the survey on central bank digital currency," BIS Papers, Bank for International Settlements, number 107.
    45. Mussa, Michael L, 1977. "The Welfare Cost of Inflation and the Role of Money as a Unit of Account," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(2), pages 276-286, May.
    46. Dyhrberg, Anne H. & Foley, Sean & Svec, Jiri, 2018. "How investible is Bitcoin? Analyzing the liquidity and transaction costs of Bitcoin markets," Economics Letters, Elsevier, vol. 171(C), pages 140-143.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cong, Lin William & Mayer, Simon, 2022. "The Coming Battle of Digital Currencies," Applied Economics and Policy Working Paper Series 320020, Cornell University, Department of Applied Economics and Management.
    2. Marcelo A. T. Aragão, 2021. "A Few Things You Wanted to Know about the Economics of CBDCs, but were Afraid to Model: a survey of what we can learn from who has done," Working Papers Series 554, Central Bank of Brazil, Research Department.
    3. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2022. "Designing central bank digital currencies," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 62-79.
    4. David Chaum & Christian Grothoff & Thomas Moser, 2021. "How to Issue a Central Bank Digital Currency," Papers 2103.00254, arXiv.org.
    5. Raphael A. Auer & Giulio Cornelli & Jon Frost, 2020. "Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies," CESifo Working Paper Series 8655, CESifo.
    6. Ferry Syarifuddin & Toni Bakhtiar, 2022. "The Macroeconomic Effects of an Interest-Bearing CBDC: A DSGE Model," Mathematics, MDPI, vol. 10(10), pages 1-33, May.
    7. Thitima Chucherd & Chanokkarn Mek-yong & Nalin Nookhwun & Passawuth Nuntnarumit & Natta Piyakarnchana & Suparit Suwanik, 2021. "Monetary and Financial Perspectives on Retail CBDC in the Thai Context," PIER Discussion Papers 152, Puey Ungphakorn Institute for Economic Research.
    8. Alexandra Mitschke, 2021. "Central Bank Digital Currencies and Monetary Policy Effectiveness in the Euro Area," Working Papers Dissertations 74, Paderborn University, Faculty of Business Administration and Economics.
    9. Jiaqi Li, 2021. "Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data," Staff Working Papers 21-65, Bank of Canada.
    10. Berentsen, Aleksander & McBride, Michael & Rocheteau, Guillaume, 2017. "Limelight on dark markets: Theory and experimental evidence on liquidity and information," Journal of Economic Dynamics and Control, Elsevier, vol. 75(C), pages 70-90.
    11. Ahnert, Toni & Assenmacher, Katrin & Hoffmann, Peter & Leonello, Agnese & Monnet, Cyril & Porcellacchia, Davide, 2022. "The economics of central bank digital currency," Working Paper Series 2713, European Central Bank.
    12. Fernández-Villaverde, Jesús & Schilling, Linda Marlene & Uhlig, Harald, 2020. "Central Bank Digital Currency: When Price and Bank Stability Collide," CEPR Discussion Papers 15555, C.E.P.R. Discussion Papers.
    13. Williamson, Stephen & Wright, Randall, 2010. "New Monetarist Economics: Models," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 2, pages 25-96, Elsevier.
    14. Dirk Niepelt, 2022. "Money and Banking with Reserves and CBDC," Diskussionsschriften dp2212, Universitaet Bern, Departement Volkswirtschaft.
    15. Cyril Monnet & Hyun Song Shin & Jon Frost & Leonardo Gambacorta & Raphael Auer & Tara Rice, 2022. "Central Bank Digital Currencies: Motives, Economic Implications, and the Research Frontier," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 697-721, August.
    16. Chen, Hongyi & Siklos, Pierre L., 2022. "Central bank digital currency: A review and some macro-financial implications," Journal of Financial Stability, Elsevier, vol. 60(C).
    17. Kiyotaki, Nobuhiro & Lagos, Ricardo & Wright, Randall, 2016. "Introduction to the symposium issue on money and liquidity," Journal of Economic Theory, Elsevier, vol. 164(C), pages 1-9.
    18. Harald Uhlig & Taojun Xie, 2020. "Parallel Digital Currencies and Sticky Prices," Working Papers 2020-188, Becker Friedman Institute for Research In Economics.
    19. Janet Hua (duplicate record) Jiang & Peter Norman & Daniela Puzzello & Bruno Sultanum & Randall Wright, 2021. "Is Money Essential? An Experimental Approach," Working Paper 21-12, Federal Reserve Bank of Richmond.

    More about this item

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2111.04483. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://arxiv.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.