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Synthetic commodity money

George Selgin

Journal of Financial Stability, 2015, vol. 17, issue C, 92-99

Abstract: The conventional dichotomy of “commodity” and “fiat” base monies overlooks a third possibility that shares some features of each. This third type, which I call “synthetic commodity money,” resembles fiat money in having no nonmonetary value; but it resembles commodity money in being not just contingently but absolutely scarce. I discuss some actual examples of synthetic commodity monies, and then argue that special characteristics of synthetic commodity money are such as might allow such a money, if properly designed, to supply the foundation for a monetary regime that does not require oversight by any monetary authority, yet is able to provide for a high degree of macroeconomic stability.

Keywords: Commodity money; Fiat money; Bitcoin; Swiss dinar (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jfs.2014.07.002

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