Iñaki Aldasoro
Money is one of the most consequential social institutions humanity has built. Starting from the most elementary monetary act, a payment, this paper provides an account of how money works, grounded in the tradition of credit theories of money. It does so by tracing the tensions that define how monetary systems function: between money and credit, highlighting the inherent hierarchy of money and the critical role of par as the price that binds the hierarchy together; between the elasticity of credit and the discipline of funding; between private initiative in money creation and the public validation that ultimately sustains it; and between domestic monetary architectures and their more fragile global counterparts. The paper argues that money is not primarily a medium of exchange, a commodity or a technology. It is an institutional achievement, a system of interlocking promises sustained by trust. Trust at scale is supported by a specific architecture: hierarchical money anchored by a central bank, elastic credit disciplined by funding, and backstops that socialise the inherent fragility of a system built on promises about an unknowable future. The paper applies the framework to gold, bitcoin and stablecoins: the first two as assets that reject the social compact that money embodies, the third as private claims that seek to join it.
Πηγή:BIS