E-Barter Versus Fiat Money: Will Central Banks Survive?

Bank of England Working Paper No. 197

Cass Business School Research Paper

27 Pages Posted: 15 Apr 2004

See all articles by Forrest Capie

Forrest Capie

Bank of England

Dimitrios P. Tsomocos

University of Oxford - Said Business School and St. Edmund Hall

Geoffrey Wood

Cass Business School

Date Written: August 2003

Abstract

New technology in computing has led some to suggest that the ability to settle transactions electronically will develop to such an extent that money will disappear from use. Two versions of this belief exist. One maintains that there will be 'e-money', issued conceivably by many organisations, and that this will replace central bank money. The other, on which this paper focuses, suggests a further development - that the very concept of a medium of exchange may become redundant, as assets or goods can be exchanged directly for other assets or goods through use of computing. In this paper we argue that the information-economising properties that allowed money to develop will also allow it to survive, despite actual and hypothesised technical progress which reduces the cost of electronic barter.

JEL Classification: E42

Suggested Citation

Capie, Forrest and Tsomocos, Dimitrios P. and Wood, Geoffrey E., E-Barter Versus Fiat Money: Will Central Banks Survive? (August 2003). Bank of England Working Paper No. 197, Cass Business School Research Paper, Available at SSRN: https://ssrn.com/abstract=530686 or http://dx.doi.org/10.2139/ssrn.530686

Forrest Capie

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom
020 7601 3680 (Phone)

Dimitrios P. Tsomocos (Contact Author)

University of Oxford - Said Business School and St. Edmund Hall ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 1865 288 932 (Phone)
+44 1865 288 805 (Fax)

Geoffrey E. Wood

Cass Business School ( email )

London, EC2Y 8HB
Great Britain
+44 0 20 7040 8740 (Phone)
+44 0 20 7040 8881 (Fax)

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