Endogenous money, liquidity and monetary reform



Dow S (2020) Endogenous money, liquidity and monetary reform. European Journal of Economics and Economic Policies: Intervention, 17 (3), pp. 367-380.

Following its revival in the 1980s, the idea of endogenous money became increasingly widely accepted. Indeed the 2008 global financial crisis was widely blamed on the untrammelled power of banks to create credit. As a result, among the ideas for reforming the monetary system are proposals designed to eliminate that power, that is, to make the money supply exogenous. The purpose of this paper is to go back to the theory of endogenous money in order to assess these proposals, in terms of what is desirable, but also crucially what is feasible. Central to this discussion is a consideration of the range of meanings given to money and endogeneity. It is argued that what is regarded as money under different conditions is an important element in money endogeneity, and is particularly relevant for the monetary reform debate.

Basil Moore; endogenous money; liquidity; monetary reform

European Journal of Economics and Economic Policies: Intervention: Volume 17, Issue 3

Publication date30/11/2020
Publication date online12/02/2020
Date accepted by journal20/12/2019
PublisherEdward Elgar Publishing

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Professor Sheila Dow

Professor Sheila Dow

Emeritus Professor, Economics