DOI: 10.21637/GT.2012.1-2.03.

Monetary and Banking Reform – Bringing back in the Monetary Fundamentals of Finance

HUBER, Joseph

Modern economy is based on its financial system, which in turn is built upon its monetary system. This constitutes a clear functional order: money governs finance, finance governs the real economy. It is one of the elusive aspects of orthodox economics to see money as a matter of just marginal concern. To any reality-based economics (historical, institutional, behavioural, and, of course, monetarist as well as modern monetary) it is self-evident, to the point of triviality, that money is the pivotal control medium of the economy. However, current debates on the ongoing banking crisis since 2008 and the ensuing sovereign debt crisis (which in turn perpetuates the banking crisis), do not for the most part take into account the fundamental role of the monetary system.

KEYWORDS: banking reform, financial crisis, credit, monetary reform

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