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A Blueprint For Creating A "Non-Conventional Unconventional" Monetary System And Arrangement

Author

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  • Atashbar, Tohid

    (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)

Abstract

Monetary policies like QE that were once seen as unconventional are now prevalent and almost “conventional”. This study tries to answer the question that in an ultimate crisis scenario, where available conventional and currently “conventional unconventional” tools are exhausted, what would be a Middle East-style “non-conventional unconventional” solution to such a crisis, given that the pseudo-magic unconventional concepts like MMT, which have been on the rise in recent times, would be deemed counter-productive in such circumstances? Based on the “3-No” or “Triple freedom” theorem which is the product of a comprehensive study of the monetary theories in the region, we propose a three-part solution called 3Fs (FFF): 1- “Full-reserve banking” on the system level, which means “No to (freedom from) credit creation from thin air in the banking system,'' 2- “Free Banking on Currency Board” or “Currency Board” on the instrument level, which means “No to (freedom from) thin air in the value of money” and 3- “Free from Subsidy” arrangement on the contract level through “Profit and Loss (and Risk) Sharing or PL(R)S” mechanism, which—by eliminating the risk and gain subsidies—means “No to (freedom from) gain from thin air on the contract level”.

Suggested Citation

  • Atashbar, Tohid, 2019. "A Blueprint For Creating A "Non-Conventional Unconventional" Monetary System And Arrangement," Studies in Applied Economics 141, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    • Handle: RePEc:ris:jhisae:0141
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    References listed on IDEAS

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    1. Jean-Claude Trichet, 2013. "Unconventional Monetary Policy Measures: Principles-Conditions-Raison d’etre," International Journal of Central Banking, International Journal of Central Banking, vol. 9(1), pages 229-250, January.
    2. Mr. Dominic Quint & Mr. Pau Rabanal, 2017. "Should Unconventional Monetary Policies Become Conventional?," IMF Working Papers 2017/085, International Monetary Fund.
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    Keywords

    Unconventional theories; non-conventional unconventional models; monetary economics; Middle-Eastern schools;
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