Naslov
Private Money Creation in the Age of Financial Globalization

Autori
Vujeva, Karlo ; Solenički, Martina

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Conference Proceedings of the International Scientific Conference Technology, Innovation and Stability: New Directions in Finance (TINFIN) / Družić, Gordan ; Šimurina, Nika ; Basarac Sertić, Martina ; Ivanišević Hernaus, Ana - Zagreb : Hrvatska akademija znanosti i umjetnosti (HAZU) ; Ekonomski fakultet Sveučilišta u Zagrebu, 2023, 111-153

ISBN
978-953-347-498-4

Skup
International Scientific Conference Technology, Innovation and Stability: New Directions in Finance (TINFIN)

Mjesto i datum
Zagreb, Hrvatska, 05.05.2022. - 06.05.2022

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Domaća recenzija

Ključne riječi
liability management, eurodollar, shadow banking, financial globalization, Fintech

Sažetak
In this paper, our aim is twofold. Firstly, we aim to explore the hierarchy and mechanisms of modern money (and near-money) creation, as there is admittedly a widespread misunderstanding of these issues. We showcase that banks are not just another intermediaries ; they are at the heart of the clearing and settlement system in the two- tiered hierarchy of credit relations that characterize modern monetary economies. We adopt a balance sheet approach with double-entry bookkeeping analysis that most consistently captures the causality and elasticity of money creation, both at the national and international level. Secondly, on the basis of the aforementioned analysis, we discuss the financial innovation from the institutional perspective, including the latest iterations in the form of Fintech and cryptocurrencies. In doing so, we argue against the popular interpretation by which they represent a revolutionary private challenge to the existing, publicly-backed monetary infrastructure. In our view, Fintech and cryptocurrencies (similar to other innovative components of the shadow banking infrastructure) are better understood as the latest evolutionary forms of private financial innovation, which has been in turn the essential driver of the post-WWII financial globalization process. Financial globalization had its embryo in the architecture of the Bretton Woods system, its catalyst in the ‘Nixon shock’, and its sudden stop in the GFC. The process has been driven by private agents, kickstarted by the ‘liability management’ of the banking sector. However, any innovation’s challenge until now has been heavily dependent on the willingness of public authorities to tolerate or reject them. This was true (for various political and/or economic reasons) in the groundbreaking developments of CD markets, eurodollar offshore creation, the rise of shadow banking and securitization, and we consider it to be true in the contemporary case of Fintech and cryptocurrencies. More so, we conclude that the defining characteristic of the post-GFC financial system is that it is market-based and public-led, opposite to bank-based and private-led as it was during the majority of the financial globalization era.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA