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Not all money is created equal: The concept of a hierarchy of money

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  • Suchánek Marián

    (Department of Economics, Faculty of Economics and Administration, Masaryk University, Brno, Czech Republic)

Abstract

The concept of a hierarchy of money or the idea that a number of instruments constitute money and that they are hierarchically related to one another is relatively recent and yet quite widespread. However, it is argued, that its comprehension differs. The most elaborated cases in which differing treatments of the term can be found are Modern Money Theory (MMT) and the Money View. At first sight, the MMT’s model of money hierarchy focuses on a hierarchy within a specific unit of account whereas the Money View perceives hierarchy not only within an individual unit of account but also across various units of accounts. But, as is shown, differences are more fundamental. It is argued that different comprehension can be explained by the different distinctions between money and credit and concept of monetary sovereignty within each approach rather than the concept of hierarchy itself. The concept of hierarchy acts, in fact, as a framework that ensures consistency in the use of different money instruments on those level.

Suggested Citation

  • Suchánek Marián, 2024. "Not all money is created equal: The concept of a hierarchy of money," Review of Economic Perspectives, Sciendo, vol. 24(2-3), pages 57-74.
  • Handle: RePEc:vrs:reoecp:v:24:y:2024:i:2-3:p:57-74:n:1001
    DOI: 10.2478/revecp-2024-0004
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    More about this item

    Keywords

    Hierarchy of money; Modern money theory; Money view; Monetary sovereignty; Nature of money;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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