Band 14, Heft 2 - Futures of money - monies of the future

This introduction reviews the main themes addressed in the special issue Futures of Money – Monies of the Future. Recalling broader historical transformations of money, this introduction focuses on how the digitalization of money interacts with the central role of states and the financial industry in the issuance and distribution of money. This concerns how money interacts with non-monetary digital information and how digital forms of social interaction transform the rules of exchange where money is used. Exploring these issues, the articles brought together here open fruitful venues to rethink the way we theorize money.

Stablecoins are second generation cryptocurrencies, aimed at maintaining their value stable with respect to official currencies. The most famous example is perhaps represented by libra, the cryptocurrency announced by Facebook in 2019 and yet to be issued; the most widespread is tether, with a market capitalization of almost 10 billion dollars and a daily transaction volume of almost 50 billion dollars, which makes it the most used cryptocurrency. The diffusion of stablecoins is hardly surprising. By minimizing volatility – the main flaw of first generation cryptocurrencies, including bitcoin –, stablecoins are expected to play an even more important role on a global scale within a few years. Our contribution deals not with the economic, but specifically with the geopolitical factors that could foster the use of stablecoins for strategic and military purposes. In particular, we focus on how such payment instruments, together with other alternative electronic payment systems, could be used as a means to circumvent economic sanctions and ultimately as a challenge to the hegemony of the US dollar in the international monetary system.

Across the world, national currencies—public goods that emerged out of a previous era of currency proliferation—are now competing with private alternatives. As paper and coins fall into disuse, the seigniorage that helps to fund the circulation and regulation of currency diminishes, while their capacity to bind together states and citizens decreases in equal measure. The Swedish central bank’s response to these threats, which includes issuing the world’s first national digital currency, charts a course that all central banks must consider in the near future.

Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. https://bitcoin.org/bitcoin.pdf outlined an alternative to the current monetary system in which banks are replaced by a peer-to-peer system to issue and transfer digital money: the Bitcoin. While Bitcoin has attracted a substantial investment volume, the system has not achieved the status of a viable alternative monetary system. However, the distributed ledger technology (DLT) underlying the payment system is being applied successfully by financial institutions and is likely to have important implications for the future of money and banking. In this paper we therefore focus on the most advanced distributed ledger application in the financial industry: R3 Corda. This paper is structured as follows. In the first section, we relate the debate about systems of money creation to the rise of Bitcoin. Next, the development of R3 Corda is discussed and the lessons learned for monetary reform. We conclude with an assessment of the scope and likelihood of monetary reform as a consequence of DLT applications by central banks.

This article explores some features of digital payments in China to raise analytical questions for a pragmatist anthropology of money. It shows that digital payments in China are concentrated in two companies, that are part of a small oligopoly of companies that organize digital connections among around 850 million people in the territory. This raises questions concerning the role of digital payments for social interdependence and the constitution of social hierarchies. The second section analyzes the institutional setting and the legitimizing narratives with which this happens. It shows a complex interdependence between the state and non-state-owned big technological companies, which produce legitimizing narratives that can be shared, divergent or even contradictory. This raises questions concerning the role of digital payments in the project of constituting a national society. In the conclusion, the paper recalls that, although these developments in the Chinese territory cannot be replicated elsewhere, they pose important questions for the analysis of digital money’s present and potential futures worldwide.

The aim of the paper is to review and discuss the implications of a new form of central bank money – retail central bank digital currency (CBDC) – for central and commercial banks, identified in the literature and by central banks. The author’s intention is also to indicate possible differences in the approach to this issue by researchers and individual central banks. The study is based on a review covering both academic literature and central banks official documents on retail CBDC. It also includes a comparative analysis of CBDC concepts (disregarding the level of implementation) outlined by 13 European and non-European central banks in their official reports. The study shows that the research papers and official reports by central banks are consistent as for the areas of influence of retail CBDCs on central banks and the banking sector. However, both do not give complete answers to questions about the consequences of CBDCs for banking systems, the economy and society. The analyses published by central banks do not provide, as one might assume, a greater level of detail and precision.