The Monetary System

CHAPTER 5 The Regulation and Observation Limits Already Accepted, Compared with the Realities of Modern Exchanges

“Don’t become angry with our politicians. They are the best ones to divert us with regulations that they revise time and time again, despite being aware of their inability to eliminate the abuses found in conventions or other things we were speaking of; and without understanding that they are only cutting off a few of the Hydra’s many heads.”

— Plato, writing in The Republic, Book IV

MONETARY REGULATION AND FOLLOW-UP

Given recognition that neither existing central bank regulations nor a gold standard provide adequate monetary regulation in today’s world, a clear need exists for an updated oversight regime. To understand the likely requirements for designing new monetary regulations, one first needs to understand how such regulatory systems were developed in the past – including their purpose, goals and partially relevant roots in Keynesian theory or otherwise outdated approaches. Although some applicable models and institutions still exist (such as central banks and the banking system’s monopoly on deposits), today’s new patterns of monetary flow determine what additional requirements for monetary regulation need to be considered in the future. A good starting point is to evaluate how the evolution of money’s role in society renders traditional observations, operational requirements and existing regulatory systems obsolete. The basis for any new regulatory ...