 Currency hierarchy and underdevelopment*Hansjörg Herr and
Zeynep Nettekoven
European Journal of Economics and Economic Policies: Intervention, 2022, vol. 19, issue 2, 238-259 Abstract: Money in capitalism is a social force which exists not only on the level of wealth owners, but is also a force which stimulates economic development (or fails to do so). According to Hajo Riese the asset-protecting function of money, which can be expressed in a liquidity premium, indicates different qualities of money. At the top of the hierarchy are a small number of currencies which take over national and international functions; at the bottom are currencies which only partly take over national functions. Countries issuing these currencies suffer from dollarisation and capital flight. The consequence is that they cannot have a strong and sustainable Schumpeterian credit–investment mechanism. External credit seems to be a solution, but external debt together with credit dollarisation leads to a fragile domestic financial system and the likelihood of overindebtedness. A poor quality of money is one key element in explaining the reproduction of underdevelopment. Keywords: currency hierarchy; dollarisation; underdevelopment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:ejeepi:v:19:y:2022:i:2:p238-259 Access Statistics for this article European Journal of Economics and Economic Policies: Intervention is currently edited by Torsten Niechoj More articles in European Journal of Economics and Economic Policies: Intervention from Edward Elgar Publishing |
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