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A simple microeconomic model for the analysis of Vollgeld

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  • Bofinger, Peter
  • Haas, Thomas

Abstract

In June 2018 the"Vollgeld" initiative will be submitted to the Swiss people. We contribute to the ongoing discussion of a sovereign money system, by providing a price-theoretic model for the money supply under a "Vollgeld"-system. As banks would no longer have the ability to create money, they are merely intermediaries of funds. The central bank would be the only institution to create money. But the central bank is no longer the only supplier of monetary base for the banking sector on the money market. Banks could also lend from the public and private sector. As the analysis of our model shows,the degree of instability would increase under the "Vollgeld"-system and result in higher interest rate volatility.

Suggested Citation

  • Bofinger, Peter & Haas, Thomas, 2018. "A simple microeconomic model for the analysis of Vollgeld," W.E.P. - Würzburg Economic Papers 99, University of Würzburg, Department of Economics.
    • Handle: RePEc:zbw:wuewep:99
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    References listed on IDEAS

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    1. Philippe Bacchetta, 2017. "The Sovereign Money Initiative in Switzerland: An Assessment," Swiss Finance Institute Research Paper Series 17-25, Swiss Finance Institute.
    2. Philippe Bacchetta, 2018. "The sovereign money initiative in Switzerland: an economic assessment," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-16, December.
    3. Klaus Abberger & Alexander Rathke & Jan-Egbert Sturm, 2018. "„Vollgeld-Initiative“ gefährdet Geldwertstabilität," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 98(5), pages 362-364, May.
    4. Xavier Freixas & Jean-Charles Rochet, 2008. "Microeconomics of Banking, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062704, December.
    5. Bofinger, Peter, 2001. "Monetary Policy: Goals, Institutions, Strategies, and Instruments," OUP Catalogue, Oxford University Press, number 9780199248568.
    6. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    7. Bofinger, Peter & Schächter, Andrea, 1995. "Alternative Operating Procedures for Monetary Policy - A New Look at the Money Supply Process," CEPR Discussion Papers 1257, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Márquez-Velázquez, Alejandro, 2019. "Developing countries' political cycles and the resource curse: Venezuela's case," Discussion Papers 2019/14, Free University Berlin, School of Business & Economics.
    2. Bofinger, Peter & Haas, Thomas, 2020. "CBDC: A systemic perspective," W.E.P. - Würzburg Economic Papers 101, University of Würzburg, Department of Economics.
    3. Chen, Chen & Wang, Haizhong & Roll, Josh & Nordback, Krista & Wang, Yinhai, 2020. "Using bicycle app data to develop Safety Performance Functions (SPFs) for bicyclists at intersections: A generic framework," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 1034-1052.
    4. Nguyen, Quang Thi Thieu & Gan, Christopher & Li, Zhaohua, 2019. "Bank capital regulation: How do Asian banks respond?," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).

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    More about this item

    Keywords

    money supply process; monetary theory; sovereign money;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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