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What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms

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  • Samuel Demeulemeester

    (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The 2007-2008 Global Financial Crisis has brought renewed interest in the 100% Money reform idea of the 1930s', the essence of which was to require 100% reserves on transaction deposits so as separate money issuance from bank loans. A modern version of this idea, the Sovereign Money proposal, has been much discussed in recent years. Some heterodox economists have harshly criticized Sovereign Money advocates for lacking a clear analytical framework, as well as for disregarding "established" literature on such topics as the causality relationship between money and prices, the accommodation of business needs, financial instability, or the seigniorage privilege. The literature on 100% Money, however, appears to have been largely overlooked by both sides of the debate-even though, as this article shows, it could have brought valuable theoretical insight to the discussion. Building upon the arguments of the 100% Money writers, this paper concludes that many of the criticisms addressed to the Sovereign Money proposal are either inconclusive or misplaced.

Suggested Citation

  • Samuel Demeulemeester, 2022. "What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms," Working Papers hal-03751756, HAL.
    • Handle: RePEc:hal:wpaper:hal-03751756
    Note: View the original document on HAL open archive server: https://hal.science/hal-03751756
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    References listed on IDEAS

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    More about this item

    Keywords

    100% money; Sovereign Money; full reserve banking; endogenous money; financial instability B26; E30; E42;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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