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The Nature of Money in Modern Economy – Implications and Consequences

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Abstract

Reforming the contemporary monetary and financial system has come under the limelight with the onset of the last international financial crisis. Zarlenga and Poteat focus on the elimination of credit money and the return of the exclusive right of issuing money to the government as a key to reforming the system. In this comment, I argue that they are right, but reform should be wider and more comprehensive. My arguments are inspired by Al-Jarhi’s model of an Islamic monetary system (1981)

Suggested Citation

  • Al-Jarhi, Mabid, 2016. "The Nature of Money in Modern Economy – Implications and Consequences," MPRA Paper 72238, University Library of Munich, Germany, revised 15 Jun 2016.
    • Handle: RePEc:pra:mprapa:72238
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    References listed on IDEAS

    as
    1. Al-Jarhi, Mabid, 2014. "Towards an Economic Theory of Islamic Finance Regulation," MPRA Paper 66744, University Library of Munich, Germany, revised 2014.
    2. Green, Jerry R. & Scheinkman, Josè Alexandre (ed.), 1979. "General Equilibrium, Growth, and Trade," Elsevier Monographs, Elsevier, edition 1, number 9780122987502.
    3. Harold L. Cole & Narayana R. Kocherlakota, 2001. "Efficient Allocations with Hidden Income and Hidden Storage," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(3), pages 523-542.
    4. Al-Jarhi, Mabid, 1980. "A Monetary and Financial Structure for an Interest-Free Economy: Institutions, Mechanism & Policy," MPRA Paper 66741, University Library of Munich, Germany, revised 2004.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    money; definition of money; monetary reform; Chicago Plan; Islamic economics; monetary policy; interest rate; seigniorage; Friedman's rule; information asymmetry; classical loan contract; Islamic finance;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E19 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Other
    • 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
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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