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Money: A Market Microstructure Approach

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  • Krueger, Malte

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.

Suggested Citation

  • Krueger, Malte, 2008. "Money: A Market Microstructure Approach," MPRA Paper 18416, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:18416
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    3. Lawrence H. White, 2015. "The Market for Cryptocurrencies," Cato Journal, Cato Journal, Cato Institute, vol. 35(2), pages 383-402, Spring/Su.

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    More about this item

    Keywords

    New monetary economics; monetary separation; market microstructure theory; monetary theory; moneyless world; financial innovation;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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