With or Without Usura? Monetary Policy and Market Creation

igescu, iulia (2023): With or Without Usura? Monetary Policy and Market Creation.

Abstract

Some selected examples from trade history and even more the rise of superstar firms in the early twenty first century make visible the eminence of monetary delocalization in the process of market creation. Market creation is highly concentrated in space. As a result, inside and outside money have evolved as complements. Extensive market creation today has become a main source of excess reserves in the banking sector. Monetary delocalization forces the process of market completeness to demand more safe assets of good quality, driving up their price. A monetary authority facing network collateral channel effects of superstar firms would have to rely on increased volumes of safe assets, to be deployed in case a lack of complete markets interrupts inside-outside money flows. Higher interest rates would make market completion more costly, slowing it down.

• Item Type: MPRA Paper
• Language: English
• Keywords: usura monetary policy excess reserves money delocalization market incompleteness inside-outside money superstar firms Ming Dynasty trade Medici banks Canton trade Reichsbank during war Romania
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B0 - General > B00 - General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N13 - Europe: Pre-1913; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N14 - Europe: 1913-; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N15 - Asia including Middle East; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

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