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Modelling Institutional Change in the Payments System, and its Implications for Monetary Policy

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  • F. H. Capie
  • D. P. Tsomocos
  • G. E. Wood

Abstract

Many institutional changes have taken place to payments systems. Indeed, they have been in continual change ever since money first emerged as the dominant technology for conducting transactions. Means of settlement between banks have changed: cheques replaced cash in many transactions, and they have in their turn been replaced partially (much more in some countries than others) by cards. The aim of this paper is to appraise one such possible technological development, namely electronic barter, and to model both it and money as transactions technologies. By comparing the models, we shall be able to appraise the future of fiat money. We argue that the economising properties of fiat money will allow it to survive, despite actual and hypothetised technical progress which reduces the cost of electronic barter.

Suggested Citation

  • F. H. Capie & D. P. Tsomocos & G. E. Wood, 2005. "Modelling Institutional Change in the Payments System, and its Implications for Monetary Policy," OFRC Working Papers Series 2005fe01, Oxford Financial Research Centre.
    • Handle: RePEc:sbs:wpsefe:2005fe01
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    1. Paul Pichler & Martin Summer & Beat Weber, 2020. "Does digitalization require Central Bank Digital Currencies for the general public?," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/19, pages 40-56.

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