Structural reforms in payment systems to avoid another systemic crisis

This paper shows how a defective architecture for domestic and international payments has made it possible for banks to exploit the endogenous nature of money in a variety of purely speculative financial-market transactions that have led to the eruption of a global systemic crisis. I elaborate on a monetary–structural reform, which should make sure that no bank will any longer be in a position to blur the distinction between money and credit, as this confusion in the banks' books originates various asset bubbles as well as systemically important financial institutions, both of which are major contributors to making the system increasingly fragile as time goes by. This reform of domestic payment systems will not be enough to avoid so-called global imbalances at an international level. I therefore propose, in the spirit of Keynes, a structural reform of the international monetary system, arguing for the emission of a supranational money in settlement of every individual transaction between any two monetary spaces.