A simple microeconomic model for the analysis of Vollgeld

Peter Bofinger and Thomas Haas

No 99, W.E.P. - Würzburg Economic Papers from University of Würzburg, Department of Economics

Abstract: In June 2018 the"Vollgeld" initiative will be submitted to the Swiss people. We contribute to the ongoing discussion of a sovereign money system, by providing a price-theoretic model for the money supply under a "Vollgeld"-system. As banks would no longer have the ability to create money, they are merely intermediaries of funds. The central bank would be the only institution to create money. But the central bank is no longer the only supplier of monetary base for the banking sector on the money market. Banks could also lend from the public and private sector. As the analysis of our model shows,the degree of instability would increase under the "Vollgeld"-system and result in higher interest rate volatility.

Keywords: money supply process; monetary theory; sovereign money (search for similar items in EconPapers)
JEL-codes: E51 E52 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wuewep:99

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