Tudor Gherasim Smirna

Bucharest University of Economic Studies

Romania

tudorsmirna@gmail.com

From commodity standard to deposit standard:

the near completion of a secular cycle in monetary globalization

ABSTRACT. The advent and international proliferation of unconventional monetary policy is the logical consequence of interventionism in the monetary and banking field. It was made necessary by central bank policies of managing and constantly lowering the interest rates. Once the zero lower bound is reached, the next logical step for the monetary authorities is to look for ways to continue lowering rates through it. To abolish cash and institute the exclusive use of bank deposits is one enticing proposal to overcome this limitation. Thus, the potency of monetary policy can be preserved by the new capacity of charging negative nominal interest rates. However, the arguments against cash are not new. We are going to show in this paper that the same arguments that were previously used to impose banknotes are today used to forbid them.

Received: February, 2015

1st Revision: April, 2015

Accepted: May, 2015

DOI: 10.14254/2071-

8330.2015/8-1/9

JEL Classification: E43, E52, F36, F42

Keywords: : Central banking, monetary standards, zero lower bound, negative interest rates