WEBVTT - How Do We Define a Currency? 0:00:00.080 --> 0:00:04.080 Hello, Odd Lots listeners. I'm Jill Wisenthal and I'm Tracy Alloway. Tracy, 0:00:04.120 --> 0:00:06.280 we're doing another live show and it's right here in 0:00:06.280 --> 0:00:06.880 New York City. 0:00:07.080 --> 0:00:10.080 Yeah, this one should be our biggest yet, and we're 0:00:10.080 --> 0:00:12.480 going to have a bunch of Odd Lots favorites and 0:00:13.160 --> 0:00:15.880 do something maybe a little different to some of our 0:00:15.960 --> 0:00:18.200 previous live podcast recordings. 0:00:18.280 --> 0:00:21.079 When the guests are revealed, the show is going to 0:00:21.120 --> 0:00:22.840 sell out right away, so you should really just go 0:00:22.840 --> 0:00:25.960 get your ticket right now. It's June twenty sixth. It's 0:00:25.960 --> 0:00:28.560 at Record NYC, and you can find a ticket link 0:00:28.600 --> 0:00:31.800 at Bloomberg dot com slash odd Lots or Bloomberg Events 0:00:31.840 --> 0:00:34.440 dot com slash odd Lots Live and why. 0:00:34.360 --> 0:00:35.440 We hope to see you there. 0:00:38.760 --> 0:00:52.480 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:54.600 --> 0:00:57.440 Hello and welcome to a special episode of the Odd 0:00:57.480 --> 0:00:59.840 Lots Podcast. I'm Tracy Alloway. 0:00:59.520 --> 0:01:01.320 And I'm Wishal Joe. 0:01:01.320 --> 0:01:03.480 This is special. I think this is the first time 0:01:03.680 --> 0:01:04.240 we've done this. 0:01:04.560 --> 0:01:06.720 We're not used to like, you know, we like to 0:01:06.760 --> 0:01:10.959 talk to academics certainly, but we've rarely ever done anything 0:01:11.120 --> 0:01:15.200 like in the proper academic setting, in the types of 0:01:15.280 --> 0:01:18.320 seminars where you know, academics are on their home turf. 0:01:18.480 --> 0:01:22.119 That's right. So we were invited by the Princeton Economic 0:01:22.240 --> 0:01:25.720 History Workshop to an event called how to Write the 0:01:25.760 --> 0:01:29.320 Biography of a Currency. I love that topic and that name. 0:01:30.040 --> 0:01:33.720 And we were invited to moderate a panel specifically on 0:01:34.040 --> 0:01:37.200 how to define a currency? How do we define what 0:01:37.360 --> 0:01:40.120 actually is money and what it does and all that 0:01:40.160 --> 0:01:43.280 good stuff. And we had an amazing panel. 0:01:43.680 --> 0:01:44.160 That's right. 0:01:44.240 --> 0:01:47.920 So we had three guests. We talked to Inyaqui al Dessoro, 0:01:48.040 --> 0:01:51.680 an economist at the Bank for International Sentiments, Rebecca Spang, 0:01:51.760 --> 0:01:55.600 a professor at the University of Indiana, Bloomington, and Stefan Ingves, 0:01:55.960 --> 0:01:58.600 the former head of the Sfeti Jerichsbank, the Central Bank 0:01:58.640 --> 0:02:02.360 of Sweden from two thousand six twenty twenty two. So 0:02:02.920 --> 0:02:04.160 take a listen to the three of them. 0:02:04.800 --> 0:02:07.600 So I mean solo, and I'm a principal economist at 0:02:07.640 --> 0:02:09.400 the banker International Settlements. 0:02:09.680 --> 0:02:13.200 Rebecca Spank, professor of history at Indiana University. 0:02:13.760 --> 0:02:17.280 Stefan Ingvest, a former governor of the Swedish Central Bank, 0:02:17.320 --> 0:02:17.960 the ricks Bank. 0:02:18.400 --> 0:02:19.880 Should we go down the line, Shall we start with 0:02:19.919 --> 0:02:21.480 Stefan how to. 0:02:21.440 --> 0:02:26.520 Write a biography of a currency, or actually maybe how 0:02:26.560 --> 0:02:30.160 to define a currency. And let me start by saying 0:02:30.200 --> 0:02:33.720 that it's a privilege to be here and discuss money, 0:02:33.840 --> 0:02:35.600 or actually I think in the course of the day 0:02:35.680 --> 0:02:38.920 money is using the plural. It just so happens that 0:02:39.040 --> 0:02:42.760 forty seven years ago, when I was visiting a graduate 0:02:42.760 --> 0:02:46.240 student here in Princeton, I took a course in monetary 0:02:46.320 --> 0:02:50.839 theory and I got hooked. And little did I back 0:02:50.919 --> 0:02:54.960 then know that with my finished background, I would end 0:02:55.040 --> 0:02:57.800 up leading the all of the central bank, the ricks Bank, 0:02:58.639 --> 0:03:02.720 and also became one of its longest serving governors. So 0:03:03.960 --> 0:03:07.120 quite a journey. And with that as a background, what 0:03:07.240 --> 0:03:12.040 a privilege to be back as a practitioner. That's my 0:03:12.160 --> 0:03:15.360 background when I'm talking about money today and what I 0:03:15.400 --> 0:03:19.360 have sort of experienced and concluded over the years. Let 0:03:19.440 --> 0:03:21.760 me start by saying that money is a social convention. 0:03:22.760 --> 0:03:25.960 Money is something about what we have in our heads. 0:03:26.720 --> 0:03:30.880 And this is also why we have moved over the 0:03:30.960 --> 0:03:35.320 centuries from seashells to something on a hard drive or 0:03:35.400 --> 0:03:39.000 nowadays maybe in the cloud. And then that of course 0:03:39.040 --> 0:03:43.760 begs the question in terms of changing technologies, what is next? 0:03:45.200 --> 0:03:50.120 Today money is an abstraction, but we still talk about 0:03:50.280 --> 0:03:53.240 money in terms of something that we can both see 0:03:53.680 --> 0:03:57.320 and touch. And it's remarkable that each and every time 0:03:57.560 --> 0:04:00.760 in my bank, when a new group of PONS politicians 0:04:01.320 --> 0:04:05.680 were appointed to the General Council, they always wanted to 0:04:05.720 --> 0:04:09.560 see the gold, not talk about the money as such. 0:04:10.200 --> 0:04:13.120 It was always can we get to see the gold? 0:04:14.080 --> 0:04:16.640 And that has something to do with this issue that, 0:04:16.720 --> 0:04:20.240 on the one hand, money is an abstraction, while on 0:04:20.279 --> 0:04:24.200 the other hand, we're sort of wired in our heads 0:04:24.240 --> 0:04:26.400 in such a way that we want to touch things. 0:04:27.839 --> 0:04:30.800 We can talk about money in many different ways, and 0:04:31.160 --> 0:04:35.440 we can talk about money at the micro level and 0:04:35.560 --> 0:04:39.080 kind of the monetary plumbing, or we can talk about 0:04:39.120 --> 0:04:42.080 money at the macro level, and at the macro level 0:04:42.080 --> 0:04:46.360 it's more sort of money tied to economic activity in 0:04:46.400 --> 0:04:48.880 one form or the other, and then it's actually economic 0:04:49.040 --> 0:04:53.520 activity in the aggregate. And you can also talk about 0:04:53.560 --> 0:04:57.359 money as something somewhere in between money as part of 0:04:57.880 --> 0:05:02.440 the financial plumbing. And that's kind of where I decided 0:05:02.520 --> 0:05:06.760 to say a few things today, and my remarks, I mean, 0:05:06.800 --> 0:05:10.920 they're really really given my background coming out of the 0:05:10.960 --> 0:05:15.520 FIAT money world. When we talk about money, I think 0:05:15.600 --> 0:05:18.479 a helpful distinction is also to try to make a 0:05:18.520 --> 0:05:26.120 distinction between public sectremoney versus private sectremoney. And also when 0:05:26.120 --> 0:05:29.440 it comes to monetary policy, which I'm not talking about today, 0:05:29.920 --> 0:05:35.000 Monetary policy is quite a lot about how to execute 0:05:35.040 --> 0:05:39.880 some kind of monetary control in this dual environment where 0:05:39.920 --> 0:05:44.680 we live today. One simple way of explaining that in 0:05:44.800 --> 0:05:48.840 order to maintain monetary control in one form or the 0:05:48.920 --> 0:05:53.720 other is basically to say that that requires an exchange 0:05:53.839 --> 0:05:57.960 rate which is one to one between public sector and 0:05:58.000 --> 0:06:01.120 private sectremoney, and if that is not the case, then 0:06:01.160 --> 0:06:05.000 the whole thing collapses. And countries of today where you 0:06:05.000 --> 0:06:08.600 can watch this is, for example, Zimbabwe and Venezuela, and 0:06:08.640 --> 0:06:13.080 you know what happened in those cases. Another way of 0:06:13.120 --> 0:06:16.080 describing this, and it's somewhat similar, and I do think 0:06:16.200 --> 0:06:18.960 it matters, but it's almost never described in this way 0:06:19.640 --> 0:06:22.320 is to talk about it in terms of front end money. 0:06:23.000 --> 0:06:26.039 That is kind of what we see and what we 0:06:26.800 --> 0:06:29.599 think that we are using, and today it's basically what 0:06:29.720 --> 0:06:32.680 you see on the screen of your computer and when 0:06:32.680 --> 0:06:35.800 you use an app, and that kind of means some 0:06:36.040 --> 0:06:39.960 vague sense represents money to us. And the other version 0:06:40.040 --> 0:06:44.000 of it is what I call backend money and ultimately 0:06:44.080 --> 0:06:47.120 back and money is central bank money in one form 0:06:47.200 --> 0:06:50.280 or the other. It's a height to the payment system. 0:06:50.360 --> 0:06:53.440 It could be a central bank digital currency, could be 0:06:53.480 --> 0:06:57.120 a deposit or something else. And it doesn't really matter 0:06:57.880 --> 0:07:01.520 if it's one ledger, if it's this due to ledger technology, 0:07:01.960 --> 0:07:05.200 it's a token or what. It's really the principle that 0:07:05.240 --> 0:07:09.640 I'm talking about. But also when technology is change, what 0:07:09.800 --> 0:07:15.239 happens is that all strategic issues come back. And many, 0:07:15.240 --> 0:07:18.240 many of you know what has happened over let's say 0:07:18.240 --> 0:07:20.440 a thousand years or something like that when it comes 0:07:20.440 --> 0:07:24.320 to money. And my conclusion from that is that since 0:07:24.400 --> 0:07:27.280 money is a convention, there is almost nothing new under 0:07:27.320 --> 0:07:31.600 the sun when it comes to money. But technologies do change, 0:07:31.720 --> 0:07:35.280 and that forces us to get back to all issues 0:07:35.320 --> 0:07:39.280 that others have grappled been in the past. A gross 0:07:39.280 --> 0:07:42.240 simplification is to say the following that back in the 0:07:42.320 --> 0:07:45.200 eighteen hundreds, and that's kind of the mindset that we 0:07:45.360 --> 0:07:49.680 have inherited today when we talk about money, everything was 0:07:49.760 --> 0:07:53.440 on paper, and in the late eighteen hundreds in a 0:07:53.520 --> 0:07:57.000 very large number of countries, the central bank ended up 0:07:57.120 --> 0:08:01.640 being the sole issue of a physical bank. In the future, 0:08:01.680 --> 0:08:04.040 we have to get used to the idea that nothing 0:08:04.080 --> 0:08:08.360 will be on paper, and that means that we have 0:08:08.440 --> 0:08:12.960 to get back to all issues and think hard about 0:08:13.080 --> 0:08:18.840 how do we reestablish the moneyness of monies in this 0:08:19.080 --> 0:08:22.120 new environment when we have to think about this, and 0:08:22.160 --> 0:08:25.360 at the same time, it's absolutely obvious that nowadays that 0:08:25.520 --> 0:08:30.120 money is also part of the state. Money is tied 0:08:30.400 --> 0:08:33.319 to a nation in one form or the other. Not 0:08:33.360 --> 0:08:36.560 necessarily every work, particularly not if you have destroyed the 0:08:36.720 --> 0:08:39.439 value of your own money. But at the same time 0:08:40.000 --> 0:08:44.600 you just have to accept the fact that parliaments and 0:08:44.720 --> 0:08:49.640 politicians have views on money, and that raises the issue 0:08:49.679 --> 0:08:52.640 going forward whether we should have a central bank digital 0:08:52.679 --> 0:08:56.120 currency or not, despite the fact that we cannot see 0:08:56.280 --> 0:09:00.240 what it should look like. Are we talking retail, Are 0:09:00.240 --> 0:09:04.200 we're talking wholesale? Ulish can talk at length about that 0:09:04.320 --> 0:09:08.480 because he is presently working on them, and this creates 0:09:08.520 --> 0:09:12.960 an interesting environment going forward when it's not about one 0:09:13.000 --> 0:09:16.360 currency dominating or not. But it's a fact that different 0:09:16.559 --> 0:09:19.520 nations come to different conclusions on this as of today, 0:09:20.000 --> 0:09:22.640 because look at what's going on in the US today. 0:09:23.080 --> 0:09:25.720 Basically more and more of it seems to be pushed 0:09:25.760 --> 0:09:29.320 to the private sector. In the EU they're working hard 0:09:29.400 --> 0:09:33.760 on a central bank digital currency. In India they have 0:09:33.840 --> 0:09:38.760 been extremely successful establishing their UPI framework, which kind of 0:09:38.880 --> 0:09:44.040 ties central bank money to the payment system and ties 0:09:44.280 --> 0:09:48.680 also front end to back end using my vocabulary in 0:09:48.720 --> 0:09:51.720 a very efficient way. Same thing is going on in 0:09:51.760 --> 0:09:55.320 Brazil and China is working hard on their project. And 0:09:55.400 --> 0:09:59.120 this projects actually will not be identical, and it's basically 0:09:59.160 --> 0:10:02.440 too early you tell which will work and which won't 0:10:02.480 --> 0:10:06.320 work and what it really does in various economies. And 0:10:06.400 --> 0:10:09.320 this means that one way you're looking at this is 0:10:09.360 --> 0:10:13.000 to call it the great game of our monetary future 0:10:13.520 --> 0:10:17.559 in a one hundred percent digital world, whatever that means 0:10:17.600 --> 0:10:22.439 going forward, and that means that in this environment we 0:10:22.600 --> 0:10:27.000 need to define or maybe redefine the role of the 0:10:27.080 --> 0:10:31.480 state in money space, and that will, of course, also 0:10:31.559 --> 0:10:35.640 in different countries, affect how we actually execute monetary policy 0:10:35.679 --> 0:10:39.199 in different different ways. What I do think matters here 0:10:39.240 --> 0:10:41.320 when it comes to money is that one is of 0:10:41.320 --> 0:10:45.120 course the stability today it's called inflation targeting, you can 0:10:45.160 --> 0:10:48.160 call it whatever you like in the old days. And 0:10:48.200 --> 0:10:52.000 the other one is what I call transactional efficiency, because 0:10:52.000 --> 0:10:57.360 if it's impossibly difficult to use your wonderful currency. No 0:10:57.440 --> 0:10:59.760 one will use it because it's just so hard to 0:10:59.840 --> 0:11:02.840 use use it. And what this really means is that 0:11:03.040 --> 0:11:07.520 new technologies bring old issues to the fore. And one 0:11:07.600 --> 0:11:11.040 extreme way of expressing this in a short form is 0:11:11.080 --> 0:11:15.360 to basically say that today, with a fairly high likelihood 0:11:15.480 --> 0:11:20.880 and old fashioned howallah transaction is probably executed in an 0:11:20.920 --> 0:11:24.880 it world in one form or another. It's also a 0:11:24.960 --> 0:11:27.959 fact when technology is changed. And this is really really 0:11:27.960 --> 0:11:31.160 what we see today that it people do not know 0:11:31.200 --> 0:11:34.440 a lot about money, and money people do not know 0:11:34.480 --> 0:11:37.960 a lot about it, and that creates a lot of 0:11:38.000 --> 0:11:41.200 confusion from time to time. And then in addition to this, 0:11:41.360 --> 0:11:44.560 when you do this, then somewhere in the middle you 0:11:44.640 --> 0:11:47.880 also have to have lawyers and a legal framework. So 0:11:47.920 --> 0:11:50.480 you have it. You have a legal framework, and you 0:11:50.600 --> 0:11:54.600 have economists and jointly this is actually what is going 0:11:54.640 --> 0:11:57.720 to define how we use money in the future and 0:11:57.760 --> 0:12:00.040 what this is all about. And then back to the 0:12:00.040 --> 0:12:05.080 holy you're writing a biography, so I do think that 0:12:05.120 --> 0:12:09.200 such a biography should also include something about where we 0:12:09.240 --> 0:12:13.160 are today and maybe speculate a bit where we are 0:12:13.200 --> 0:12:15.520 heading into the future. Thank you. 0:12:16.960 --> 0:12:21.000 So Stephan just said that money is a convention, and 0:12:21.160 --> 0:12:24.679 so there's really nothing new. Technologies just present the same 0:12:24.880 --> 0:12:30.760 questions in different guises. I would say that conventions are 0:12:30.800 --> 0:12:36.160 socially determined and societies change, and so the convention for 0:12:36.640 --> 0:12:40.640 issuing money, say in the ancient Mediterranean, is going to 0:12:40.640 --> 0:12:45.040 be different than the convention in the Middle Ages, and 0:12:45.160 --> 0:12:48.960 is going to be different again from the conventions under capitalism, 0:12:49.160 --> 0:12:52.040 as Chris was just talking about. I think another thing 0:12:52.080 --> 0:12:58.680 to think about is that money, like any technology, when 0:12:58.679 --> 0:13:02.160 it's working well, we don't really pay attention to it. 0:13:02.160 --> 0:13:05.600 It's only if the power goes out that we suddenly 0:13:05.640 --> 0:13:09.280 realize we're in a room that has electricity, and normally 0:13:09.600 --> 0:13:13.720 it's just sort of humming along in the background. So 0:13:13.800 --> 0:13:18.040 I think with currency, we and here I mean ordinary 0:13:18.120 --> 0:13:21.400 users of money, not in fact central bankers, but the 0:13:21.480 --> 0:13:25.160 great majority of people do not think of money as 0:13:25.200 --> 0:13:29.000 something that has a biography. It's not born, it doesn't 0:13:29.040 --> 0:13:34.280 go through adolescence, reach adulthood, then be an old age. Certainly, 0:13:34.520 --> 0:13:38.480 ordinary people don't imagine money as something that's going to die. 0:13:38.960 --> 0:13:41.960 If they are fortunate, if they are privileged, there comes 0:13:42.000 --> 0:13:44.160 a point in their lives when they start to think 0:13:44.160 --> 0:13:46.600 about what they are going to do with their money 0:13:46.880 --> 0:13:51.080 when they are dead. But implicit assumption there is that 0:13:51.160 --> 0:13:55.680 the money itself is immortal. After all, that's what makes 0:13:55.720 --> 0:14:01.240 it a store of value. So a fully functional currency 0:14:01.360 --> 0:14:03.760 in the mind of the people who use it seems 0:14:03.760 --> 0:14:06.640 in fact to be outside of history, all right, that 0:14:06.679 --> 0:14:09.400 it's not going to have a history or a biography. 0:14:09.920 --> 0:14:13.800 And on the other hand, I will say as a 0:14:13.920 --> 0:14:19.560 historian that even using the word currency to refer to 0:14:19.560 --> 0:14:23.840 the monies used one place and not another is in 0:14:23.960 --> 0:14:29.760 no way eternal or immortal. Locke John Locke, the famous philosopher, 0:14:30.080 --> 0:14:33.480 in his Some Considerations of the Consequences of the Lowering 0:14:33.520 --> 0:14:36.680 of Interest in Raising the Value of Money sixteen ninety two, 0:14:37.240 --> 0:14:41.640 uses the word current twenty eight times, but never the 0:14:41.680 --> 0:14:47.680 word currency. So the way we think about currency is 0:14:47.720 --> 0:14:50.840 itself the product. And this ties again to something Stephan 0:14:50.960 --> 0:14:56.640 just said of late eighteenth and nineteenth century revolutionary nationalism. 0:14:56.880 --> 0:14:59.760 So a rupture with the past. It's a revolution and 0:14:59.800 --> 0:15:05.200 the growing naturalization of the nation state. The assumption that, well, 0:15:05.240 --> 0:15:07.480 of course there are nations and they have states. This 0:15:07.640 --> 0:15:11.920 is a historically specific development. It wasn't a concept people 0:15:11.960 --> 0:15:14.360 had in the Middle Ages. It doesn't make sense if 0:15:14.400 --> 0:15:17.880 you think about the very long history of China before 0:15:17.880 --> 0:15:20.880 the Republic, and it may not be true in the future, 0:15:21.200 --> 0:15:25.920 but in the mid eighteen hundreds, having your own money 0:15:26.520 --> 0:15:30.720 was one of the things, along with a flag, a 0:15:30.760 --> 0:15:35.440 standardized language, an anthem, that established that some group of 0:15:35.480 --> 0:15:39.440 people got to be a nation. And as with so 0:15:39.720 --> 0:15:44.840 many features of nation thinking, a currency is part of 0:15:44.920 --> 0:15:50.360 how a bounded community is imagined and defined. Dollars on 0:15:50.440 --> 0:15:53.640 one side of the border, pesos on the other. I mean, 0:15:53.680 --> 0:15:57.160 that's the theory. In practice, of course, it's not always 0:15:57.200 --> 0:16:01.680 the reality. I grew up in Maine and there Canadian 0:16:01.960 --> 0:16:06.360 coin circulated on par with American and you didn't even 0:16:06.400 --> 0:16:09.480 notice whether they were Canadian dimes or US dimes. They 0:16:09.480 --> 0:16:14.440 were just all dimes. So, prior to the debates in 0:16:14.480 --> 0:16:18.200 Great Britain occasioned by the Bank of England's suspension of 0:16:18.240 --> 0:16:21.400 payments in seventeen ninety seven and then the eventual resumption 0:16:21.920 --> 0:16:27.640 decades later after the Napoleonic Wars, currency was a quality 0:16:27.680 --> 0:16:30.880 that a money object might have in some markets, and 0:16:30.960 --> 0:16:35.720 not having others currency meant that it was widely accepted 0:16:35.720 --> 0:16:39.560 as a means of exchange. And what's crucial here is 0:16:39.560 --> 0:16:42.040 that the coins are the bills that quote unquote past 0:16:42.240 --> 0:16:47.440 current or were discounted at a predictable rate in any 0:16:47.480 --> 0:16:51.200 given place, were not necessarily expected to be units of 0:16:51.200 --> 0:16:55.840 account or long term stories of value. Current, after all, 0:16:55.920 --> 0:16:58.360 is a reference to time as well as to the 0:16:58.400 --> 0:17:01.800 forces that move goods across the sea and actually lock 0:17:02.080 --> 0:17:06.800 in some considerations, makes lots of ponds on current in 0:17:06.840 --> 0:17:10.240 the sense of a money that passes current and current 0:17:10.400 --> 0:17:12.640 in terms of how you move things through the ocean. 0:17:13.359 --> 0:17:15.600 So think a little bit more about what it would 0:17:15.680 --> 0:17:17.960 mean for a mode of payment or a means of 0:17:18.000 --> 0:17:21.960 exchange not to be the unit of account. In early 0:17:22.080 --> 0:17:26.600 modern France, so seventeenth eighteenth century, before the Revolution, the 0:17:26.720 --> 0:17:31.359 common large denomination coin was an AQ, and it was 0:17:31.440 --> 0:17:35.359 called that because it depicted the aquson the shield of 0:17:35.400 --> 0:17:38.440 the French monarchy on one side of it. But accounts 0:17:39.160 --> 0:17:43.280 were kept in leave pounds. There was nothing circulated that 0:17:43.359 --> 0:17:47.960 was called a leave and no denomination indicated on the AQ, 0:17:48.760 --> 0:17:50.840 so the coin was called that because of what it 0:17:50.880 --> 0:17:54.800 looked like. Was it worth three leave four four and 0:17:54.840 --> 0:17:57.760 a half? It was up to the king to determine, 0:17:58.080 --> 0:18:02.840 and in fact, in periods of political disruption, often in 0:18:02.880 --> 0:18:07.440 periods of war, the king could revalue the circulating medium. 0:18:07.600 --> 0:18:10.240 Louis the fourteenth did it a lot in the final 0:18:10.280 --> 0:18:14.320 decades of his life. So there was a gap between 0:18:14.320 --> 0:18:18.520 what circulated and how people counted, and that's not just 0:18:18.640 --> 0:18:24.159 a weird French anomaly. No pennies and hardly any shillings 0:18:24.320 --> 0:18:27.240 were minted in eighteenth century Britain, but people went on 0:18:27.359 --> 0:18:31.080 keeping their accounts in pound shilling pence even if they 0:18:31.119 --> 0:18:36.199 had none of those things. Another distinctive feature of the 0:18:36.240 --> 0:18:38.600 early modern period is that it was up to the 0:18:38.680 --> 0:18:42.400 private sector to determine whether to bring gold and silver 0:18:42.800 --> 0:18:44.879 to the mint to be stamped as money or not, 0:18:45.480 --> 0:18:48.080 and that gold and silver being brought to the mint 0:18:48.760 --> 0:18:53.639 might be newly mined or from the Americas, or it 0:18:53.680 --> 0:18:58.760 could be coins stamped by some other sovereign. Economic growth 0:18:58.800 --> 0:19:02.360 in eighteenth century franch in Britain was largely made possible 0:19:02.359 --> 0:19:06.680 by private money, bills of exchange, promissory notes from one 0:19:06.720 --> 0:19:10.199 merchant to another, and all sorts of short term notes 0:19:10.280 --> 0:19:14.640 written by one government office to another, and that model 0:19:14.880 --> 0:19:19.840 of a private choice continued to inform debates during the 0:19:19.880 --> 0:19:24.640 French Revolution, as I suspect everybody knows, the National Assembly 0:19:25.240 --> 0:19:30.800 issued paper backed by the value of nationalized church properties. 0:19:30.920 --> 0:19:35.480 These are the assigna. But it didn't mandate that the 0:19:35.520 --> 0:19:41.240 assignac circulate on par or at any particular exchange rate 0:19:41.680 --> 0:19:47.800 for the coin still in circulation, and many people argued that, well, 0:19:48.040 --> 0:19:51.280 money is a merchandise like any other, and it was 0:19:51.440 --> 0:19:54.600 up to the money changers to say, well, I'll give 0:19:54.640 --> 0:19:57.600 you three AQ for your assign of twenty five leave, 0:19:57.760 --> 0:20:00.159 or I'll give you ten. That was up to the 0:20:00.200 --> 0:20:05.720 market to determine. So a century after this period, with 0:20:05.800 --> 0:20:11.760 the rising prominence of classical and neo classical economics, Europeans 0:20:11.880 --> 0:20:16.600 generally reacted to this sort of monetary variety and the 0:20:16.720 --> 0:20:21.080 tension between private and public issuers as a sign of 0:20:21.240 --> 0:20:25.240 backwardness and inefficiency, even though it had been the norm 0:20:25.320 --> 0:20:29.160 in Europe less than one hundred years earlier. So when 0:20:29.160 --> 0:20:33.040 they encountered it in the Qing Empire or in South Asia, 0:20:33.440 --> 0:20:37.160 they immediately denounced it. I think in part because they 0:20:37.200 --> 0:20:41.000 realized that as long as the sort of local knowledge 0:20:41.160 --> 0:20:43.439 was relevant, they were never going to be able to 0:20:43.520 --> 0:20:49.920 outcompete local users so they impose this new European model 0:20:50.359 --> 0:20:54.120 of one country won money, what some people have called 0:20:54.119 --> 0:20:58.480 the Westphalian logic, on the rest of the world. So 0:20:58.760 --> 0:21:01.280 there are other things that I can say. I think 0:21:01.280 --> 0:21:04.000 what I want to end on is that the common 0:21:04.080 --> 0:21:09.359 sense understanding of money as something without a history, something 0:21:09.400 --> 0:21:14.000 immortal or eternal, is of course a fantasy. But very 0:21:14.359 --> 0:21:19.360 often when histories of money get written, they nonetheless focus 0:21:19.440 --> 0:21:24.040 on those elements, the theories of economists, the intention of planners, 0:21:24.320 --> 0:21:28.199 that do themselves have some claim on immortality in that 0:21:28.200 --> 0:21:32.280 they're at least written down otherwise recorded, and can be 0:21:32.359 --> 0:21:35.720 found on the shelves of libraries or in the cartons 0:21:35.760 --> 0:21:40.560 of archives. What that history misses is the actual day 0:21:40.560 --> 0:21:45.080 to day practice of money, what ordinary people are doing 0:21:45.160 --> 0:21:48.080 with their money, and how they're thinking about it. That 0:21:48.240 --> 0:21:50.800 is a much more difficult history to write, but it's 0:21:50.840 --> 0:21:52.879 the one that I am committed to write it. 0:21:53.000 --> 0:21:55.920 Thank you, okay, So let me first start by by 0:21:55.960 --> 0:21:58.840 thanking Harold and Brendan for for inviting me, for giving 0:21:58.840 --> 0:22:01.680 me a chance of percent here. This fantastic event to me, 0:22:01.760 --> 0:22:03.919 it's a real honor to share the panel with with 0:22:04.000 --> 0:22:06.960 Rebeca Stephan the tower in fear of course, in the 0:22:07.000 --> 0:22:09.480 central banking community. And if I'm still your own phrase 0:22:09.560 --> 0:22:13.280 with the with the perfect moderators. So before I begin, 0:22:13.359 --> 0:22:15.159 let me start by reminding you that these are my 0:22:15.240 --> 0:22:16.879 views and not those of the of the Bank for 0:22:16.920 --> 0:22:19.800 International Settlements. I would like to start by saying something 0:22:19.840 --> 0:22:22.600 that is probably very uncontroversial, which I think money is 0:22:22.640 --> 0:22:25.439 one of the most, if not the most consequential and 0:22:25.440 --> 0:22:29.960 impactful social technology that was ever by humanity. And as 0:22:29.960 --> 0:22:32.280 a monetary economist, of course, I tend to think as 0:22:32.320 --> 0:22:36.560 this as the most fascinating as well. And I mentioned 0:22:36.800 --> 0:22:38.959 social because I think this is something that came up 0:22:39.000 --> 0:22:43.240 in the in both Stephan and Rebecca's comments that money 0:22:43.280 --> 0:22:45.560 is a social and institution that is sustained by a 0:22:45.600 --> 0:22:48.639 share expectation that money that is accepted in payments today 0:22:48.680 --> 0:22:51.000 is going to be accepted in payments tomorrow. And this 0:22:51.080 --> 0:22:54.080 requires trust in money. This requires trust in the stability 0:22:54.080 --> 0:22:57.840 of money, and also this requires trust in the ability 0:22:58.320 --> 0:23:01.040 of money to elastically scale to meet the needs of 0:23:01.119 --> 0:23:04.200 a growing economy. So I think two things then follow 0:23:04.240 --> 0:23:07.200 from this perspective. The first is the centrality of money. 0:23:07.800 --> 0:23:10.159 Many economies often conceive of money as a veil, that 0:23:10.280 --> 0:23:13.760 sort of mask and underlying real world of commodity production 0:23:13.840 --> 0:23:16.880 and exchange. I don't share this. I don't share this view, 0:23:16.880 --> 0:23:18.680 and I think, like probably like many people in the room, 0:23:19.080 --> 0:23:21.200 I conceive of money as the essence of a world 0:23:21.200 --> 0:23:25.800 of interlocking promises to pay. So Stephan also mentioned tokens, 0:23:25.800 --> 0:23:29.040 and then Michael, Yes, I mentioned organization quite prominently in 0:23:29.359 --> 0:23:32.119 the dinner speech, and I think it's actually possible to 0:23:32.160 --> 0:23:36.400 conceive of money as the primal or primore. Their original 0:23:36.520 --> 0:23:39.399 organization is the organization of the credit and that relationships 0:23:39.440 --> 0:23:42.360 that bind all of us together through the financial commitments 0:23:42.400 --> 0:23:45.760 that we make that we make to each other. So 0:23:45.760 --> 0:23:48.199 as the first element centrality of money's second element is 0:23:48.240 --> 0:23:51.320 the emphasis on payment. So money is, as far as 0:23:51.359 --> 0:23:53.640 I conceive it, first and foremost, means of payment, which 0:23:54.040 --> 0:23:57.000 which is meant to say, a means of certainment. And 0:23:57.040 --> 0:23:58.520 I think this is important because it gets me in 0:23:58.600 --> 0:24:01.720 some way, after dancing around the concept of what is money, 0:24:01.720 --> 0:24:04.960 to start to define money a bit because it points 0:24:04.960 --> 0:24:08.520 to a key qualitative distinction between money and credit, between 0:24:08.560 --> 0:24:10.720 a means of payment or a means of settlement and 0:24:10.760 --> 0:24:13.359 a promise to pay. So credit is a promise to 0:24:13.400 --> 0:24:17.760 pay money which effectively delays finance settlement, and money is 0:24:17.760 --> 0:24:21.280 a way to extinguish credit, to extinguish credit, sorry fulfilling 0:24:21.400 --> 0:24:25.000 that obligation when basically when settlement comes to and in 0:24:25.000 --> 0:24:27.479 this sense, money is better than credit, especially in crisis, 0:24:27.480 --> 0:24:30.240 which is something that goes along what you were mentioned 0:24:30.280 --> 0:24:32.600 in terms of how people use it. So people might 0:24:32.600 --> 0:24:34.719 not understand it in this terms, but they understand very 0:24:34.720 --> 0:24:38.760 intuitively that money is better than credit in crisis, and 0:24:38.119 --> 0:24:40.679 as coming from an emerging market, I can tell you 0:24:40.920 --> 0:24:45.000 this is very much the case. Now, this still makes 0:24:45.040 --> 0:24:47.280 the question what is money then? And I think my 0:24:47.800 --> 0:24:50.120 answer as an economy should not surprise anyone, and it's 0:24:50.119 --> 0:24:53.560 going to be underwhelming. It depends. It depends, because I 0:24:53.600 --> 0:24:55.560 really do think it depends. It depends on who issue 0:24:55.600 --> 0:24:58.679