On money, debt, trust and central banking

Keynote speech by Mr Claudio Borio, Head of the Monetary and Economic Department of the BIS, at the Cato Institute, 36th Annual Monetary Conference, Washington DC, 15 November 2018.

On money, debt, trust and central banking (00:54:47)

In this keynote address, Borio addresses issues like the relationship between money and debt, the viability of cryptocurrencies as money, money neutrality and the nexus between monetary and financial stability. The present monetary system, with central banks and a prudential apparatus at its core, can and must be improved, but it still provides the best basis to build on.

Abstract

This essay examines in detail the properties of a well functioning monetary system - defined as money plus the mechanisms to execute payments - in both the short and long run, drawing on both theory and the lessons from history. It stresses the importance of trust and of the institutions needed to secure it. Ensuring price and financial stability is critical to nurturing and maintaining that trust. In the process, the essay addresses several related questions, such as the relationship between money and debt, the viability of cryptocurrencies as money, money neutrality, and the nexus between monetary and financial stability. While the present monetary system, with central banks and a prudential apparatus at its core, can and must be improved, it still provides the best basis to build on.