About Current Scholarship

This page contains abstracts and links to recent scholarship on monetary design and related issues. We also welcome posts to older scholarship that should be flagged.
Please submit abstracts to Dan Rohde:

Current Scholarship
The ECB and € E-Banknotes

Corinne Zellweger-Gutknecht, University of Basel, Benjamin Geva, Osgoode Hall Law School, Seraina N. Gruenewald, Radbound University Nijmegen

The modern monetary system is controlled by the state and yet linked to private deposit banking. Monetary value held in deposits with commercial banks is known as ‘commercial bank money’ (CoBM).

Current Scholarship
Jim Crow Credit

Mehrsa Baradaran, University of California Irvine

The New Deal created a separate and unequal credit market—high-interest, non-bank, installment lenders in black ghettos

Current Scholarship
Bad Money

Author: Dan Awrey

Money is, always and everywhere, a legal phenomenon. In the United States, the vast majority of the money supply consists of monetary liabilities

Current Scholarship
Money Creation in Fiat and Digital Currency Systems

Authors: Marco Gross and Christoph Siebenbrunner

To support the understanding that banks’ debt issuance means money creation, while centralized nonbank financial institutions’ and decentralized bond market intermediary lending does not, the paper aims to convey two related points

Current Scholarship
Bagehot’s Giant Bubble Failure

Author: Andrew Odlyzko

Walter Bagehot is remembered today primarily as a proponent of the doctrine of lender of last resort, in which central banks pump money into the economy to ameliorate the damage from a financial crisis.

Current Scholarship
Banks are not intermediaries of loanable funds – facts, theory and evidence

Authors: Zoltan Jakab and Michael Kumhof

In the loanable funds model, banks are modelled as resource-trading intermediaries that receive deposits of physical resources from savers before lending them to borrowers. In the financing model, banks are modelled as financial intermediaries whose loans are funded by ex-nihilo creation of ledger-entry deposits that facilitate payments among nonbanks. The financing model predicts larger and faster changes in bank lending and greater real effects of financial shocks.

Current Scholarship
State Building for a Free Market: The Great Depression and the Rise of Monetary Orthodoxy

Author: David M. P. Freund

The U.S. government transformed American finance between 1913 and 1935 by assuming extraordinary new powers over the banking sector and the money supply. And the government’s actions were reliably controversial. Beginning soon after the Federal Reserve began operations and lasting through the reforms that restructured the institution during the New Deal, critics warned that federal overreach in financial markets posed an existential threat to the free-enterprise system.

Current Scholarship
Money and modernization in early modern England

Author: Nuno Palma

Classic accounts of the English industrial revolution present a long period of stagnation followed by a fast take-off. However, recent findings of slow but steady per capita economic growth suggest that this is a historically inaccurate portrait of early modern England. This growth pattern was in part driven by specialization and structural change accompanied by an increase in market participation at both the intensive and extensive levels. These, I argue, were supported by the gradual increase in money supply made possible by the importation of precious metals from America. They enabled a substantial increase in the monetization and liquidity levels of the economy, hence decreasing transaction costs, increasing market thickness, changing the relative incentive for participating in the market and allowing agglomeration economies to arise. By making trade with Asia possible, precious metals also induced demand for new desirable goods, which in turn encouraged market participation. Finally, the increased monetization and market participation made tax collection easier. This helped the government to build up fiscal capacity and as a consequence to provide for public goods. The structural change and increased market participation that ensued paved the way for modernization.

Current Scholarship
Are Bank Fiduciaries Special?

Author: Robert Hockett

A growing body of post-crisis legal and economic literature suggests that future financial crises might be averted by tinkering with the internal governance structures of banks and other financial institutions. In particular, contributors to this literature propose tightening the fiduciary duties under which officers and directors of the relevant financial institutions labor. I argue in this symposium article that such proposals are doomed to failure under all circumstances save one - namely, that under which the relevant financial institutions are in whole or in part treated as publicly owned. The argument proceeds in two parts. I first show that the financial dysfunctions that culminate in financial crises are not primarily the products of defects in individual rationality or morality, ubiquitous as such defects of course always are. Rather, I argue, fragility in the financial markets stems from what I elsewhere dub recursive collective action problems, pursuant to which multiple acts of individual rationality aggregate into instances of collective calamity. This form of vulnerability is endemic to banking and financial markets. I next show that the best understanding of fiduciary obligation is that pursuant to which she who is subject to the obligation minimizes the 'space,' or separateness, that subsists between her and the beneficiary of her obligation.