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The Money ProblemRethinking Financial Regulation$
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Morgan Ricks

Print publication date: 2016

Print ISBN-13: 9780226330327

Published to Chicago Scholarship Online: September 2016

DOI: 10.7208/chicago/9780226330464.001.0001

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(p.1) Introduction

(p.1) Introduction

Chapter:
(p.1) Introduction
Source:
The Money Problem
Author(s):

Morgan Ricks

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226330464.003.0001

The Introduction frames the problem of monetary system design and lays out the book’s central themes and arguments. The shadow banking system—basically, the system of private money creation—serves as an entry point. The chapter offers a brief overview of this system and the central role it played in the recent financial crisis. It then explains what it means to say that shadow banking is a monetary phenomenon. Armed with this recognition, we can see that asking “what should be done about shadow banking” is tantamount to asking “how should our monetary system be designed.” Next, the chapter sketches the book’s blueprint for a revamped system of money and banking. The approach would confine the issuance of monetary instruments (functionally defined) to a designated class of chartered entities, and it would make the money supply sovereign and nondefaultable. The chapter concludes that, before embarking on a vast array of costly and speculative interventions in the financial system, we might be well served by trying to get money right. It might then turn out that many of the supposed problems of finance are not as big as we thought.

Keywords:   monetary system, money creation, shadow banking, financial stability

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