Money: A Market Microstructure Approach

Krueger, Malte (2008): Money: A Market Microstructure Approach. Published in: Rome Discussion Paper Series (January 2008): pp. 1-28.

Abstract

The current discussion about the future of the financial system draws heavily on a set of theories known as the ‘New Monetary Economics’. The New Monetary Economics predicts that deregulation and financial innovation will lead to a moneyless world. This paper uses a market microstructure approach to show that a common medium of exchange that serves as unit of account will remain a necessary instrument to reduce transaction costs. This finding is supported by empirical evidence from foreign exchange markets.

• Item Type: MPRA Paper
• Language: English
• Keywords: New monetary economics, monetary separation, market microstructure theory, monetary theory, moneyless world, financial innovation
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems ; Standards ; Regimes ; Government and the Monetary System ; Payment Systems; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General

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