Digitalisation has changed the way monetary systems work for many years already, but recently it has started to change its structure more fundamentally.
Developed economies rapidly reduce the importance of cash, and in some cases envisage becoming cashless entirely in the foreseeable future.
At the same time digital currencies have appeared. The first wave of cryptocurrencies such as Bitcoin, Ethereum or Ripple have failed to gain relevance in terms of their share in monetary transactions.
THE MONETARY SYSTEM AND THE IMPACT OF DIGITALISATION When discussing the impact of digitalisation on the monetary system it is useful to distinguish between architecture and technology of a monetary system. While digital money and electronic payment systems have become increasingly important elements of the monetary system for many years already, they so far have not substantially changed the architecture of the traditional two-tiered monetary system based on central bank money and deposits in commercial banks. New developments such as private money in the form of cryptocurrencies and the prospect of digital currencies issued by the government or private entities have the potential to radically alter the way the monetary system works.
2.1. Money
Money is traditionally defined as a financial instrument that fulfils three main functions:
(1) Facilitate the indirect trade of goods and services as a generally accepted medium of exchange,
(2) serve as a store of value, and (3) provide a common unit of account to accurately compare the value of goods and services.2
Irrespective of its concrete form, being the generally accepted medium of exchange is arguably the
identifying characteristic of money, with the other two functions being of subordinate nature (Fiedler
et al. 2018). As the most pervasive good, money constitutes a category of its own as it is neither an
object of consumption (it does not directly satisfy human needs) nor a means of production (the
usefulness of money to allow for increasingly complex production processes does not depend on its
quantity).
DOWNLOAD PDF AT THIS LINK ---> https://www.linkedin.com/posts/belvedere_the-future-of-money-ugcPost-6607580581217865728-UpJr
THE MONETARY SYSTEM AND THE IMPACT OF DIGITALISATION When discussing the impact of digitalisation on the monetary system it is useful to distinguish between architecture and technology of a monetary system. While digital money and electronic payment systems have become increasingly important elements of the monetary system for many years already, they so far have not substantially changed the architecture of the traditional two-tiered monetary system based on central bank money and deposits in commercial banks. New developments such as private money in the form of cryptocurrencies and the prospect of digital currencies issued by the government or private entities have the potential to radically alter the way the monetary system works.
DOWNLOAD PDF AT THIS LINK ---> https://www.linkedin.com/posts/belvedere_the-future-of-money-ugcPost-6607580581217865728-UpJr
