Essays in Honour of Charles Goodhart, Volume One
Edited by Paul Mizen
Discussion of ‘Money and the monetization of credit’ Anne Sibert The contribution of this entertaining chapter is to provide a storehouse of ingredients for concocting theoretical and empirical models of ﬁnancial networks. Some of the ingredients are schemes for classifying things, such as maturity of assets or time frames for modelling. Other ingredients are data, such as the cost per capita of a mass consumer credit assessment, a variety of ﬁgures from the 1999 Statistical Abstract of the United States, and the number of personal connections required for ‘six degrees of separation’ to span the globe. One of the most interesting data sets is the author’s mixture of guesses and estimates about the size of various types of networks that an individual belongs to and the intensity of the corresponding bilateral relationships. Martin Shubik suggests that a way the numbers in the chapter might be used is to measure the acceptability of diﬀerent types of credit in exchange for goods and services. The models the author apparently envisions could be used to address many questions of current importance. Technology and the regulatory environment now allow the private-sector issuance of e-cash, the electronic cousin of the banknote, and this has fostered interest in the role of inside money. A number of issues arise. Do we need a central bank to provide a medium of exchange? Is the co-existence of inside and outside money optimal? Are we likely to end up with many types of inside money, trading at diﬀerent...
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