By Sergio Rossi
Foreign in scope and written through a number one younger Post-Keynesian economist, this booklet specializes in the operating of cash and funds in a multi-bank payment procedure in which banks and non-bank monetary associations were increasing their operations outdoor their international locations of incorporation. Departing from conventionally held ideals, Sergio Rossi units off from a good research of the logical starting place of cash, that's the fundamental precept of double-entry book-keeping wherein banks list all bills and credit for extra reference and cost and offers theoretical and empirical advances in explaining funds endogeneity for the research of latest family and foreign financial concerns. displaying that either cash and banking have profound implications for actual fiscal actions, this leading edge paintings is key studying, not just for students in financial economics, but additionally for execs fascinated with financial coverage and funds process concerns.
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Additional info for Money and Payments in Theory and Practice (Routledge International Studies in Money & Banking)
Credit and production Consider now banking and production activities. There is indeed the belief that money is issued by banks with a positive purchasing power, as banks purchase securities that ﬁrms aim to sell ‘for raising the funds in order to carry out the investment programme’ (Morishima 1992: 161). In this view, ‘the banking system’s ability to create money is ultimately restricted to its ability to ﬁnd good credit risks supported by adequate loan collateral’ (Dalziel 2001: 33). In fact, the ability of banks to buy securities depends on the availability of income, that is, purchasing power, which either pre-exists or is the result of the banks’ monetization of newly produced output through the credit that they grant to ﬁrms.
As such, they are incommensurable. If money is actually the standard of value, therefore, it has not to be itself a commodity, because otherwise it would itself need to be measured using another standard of value, in which case inﬁnite recursivity makes this measurement logically impossible within the realm of physical magnitudes. It is therefore necessary to consider the nature of money abstracting from the physical world, and its related dimensional units of measurement, to understand the peculiar as well as proper nature of money.
This view notably ‘requires that there be a basic monetary asset which unambiguously represents the standard of value and is universally acceptable in the ultimate discharge of debts’ (Dow and Smithin 1999: 77). In other words, ‘[b]anks are deemed to be so creditworthy that no holder of their debts would ever ask for reimbursement either in kind or in the debt of another agent’ (Parguez and Seccareccia 2000: 103). 1), in exchange for non-monetary assets (say ﬁnancial claims, or securities) that the public deposits with the bank and that the latter records on the assets side of its balance sheet.