The Money ProblemRethinking Financial Regulation

The Money ProblemRethinking Financial Regulation

Morgan Ricks

Print publication date: 2016

ISBN: 9780226330327

Publisher: University of Chicago Press

Abstract

This book brings a missing and critical dimension to the ongoing debates over financial stability policy. Its core argument is that the problem of financial instability is mostly a problem of monetary system design. This argument departs sharply from today’s prevailing view, in which financial instability is generally seen to be an inherent feature of financial capitalism. The book offers a concrete and workable blueprint for a modernized system of money and banking. The proposal is not radical; on the contrary, it is fairly conservative. It could be accomplished through a series of incremental changes to the current system. The book argues that recent financial regulatory reforms—in the United States and, by extension, abroad—have been mostly on the wrong track. Those reforms are an unreliable safeguard against future “shadow banking” panics and other types of financial crises. The book suggests that a revamp of the monetary framework could pave the way for a dramatic reduction in the scope and complexity of modern financial stability regulation.