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Electronic Money Free Banking and Some Implications for Central Banking

Author

Listed:
  • Yuksel Gormez
  • Christopher Houghton Budd

Abstract

This paper discusses electronic money, its relation to free banking and some implications for central banking. It begins by introducing its conceptual framework for modern central banking, in terms of which it then rehearses the free banking argument. It then reviews the development of e-money in terms of both electronic payment methods and electronic issue, with special attention paid to the latter. The discussion includes both mainstream developments, such as Mondex, and 'alternative' schemes such as LETS. From here the paper proceeds by way of a consideration of the synergy between electronic issue of money and free banking precepts, to a consideration of some implications for the future of central banking generally. It offers an 'contestable' model of central banking, which endeavours to show the effects that e-money may be expected to have (and, indeed, may already be having) as regards monetary policy, financial supervision and seignorage. It concludes that even in its current stage of development, the emergence of e-money not only reflects and supports key free banking concepts, but may be nudging modern central banking towards free banking practice.

Suggested Citation

  • Yuksel Gormez & Christopher Houghton Budd, 2004. "Electronic Money Free Banking and Some Implications for Central Banking," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 4(1), pages 67-105.
    • Handle: RePEc:tcb:cebare:v:4:y:2004:i:1:p:67-105
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    References listed on IDEAS

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    6. Barbara A. Good, 1998. "Private money: everything old is new again," Economic Commentary, Federal Reserve Bank of Cleveland, issue Apr.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Electronic Money; Free Banking; Central Banking;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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