Post-Modern Criticism of Monetary System and Financial Institutions

Post-Modern Criticism of Monetary System and Financial Institutions

Adi , Fišević
ERGÜN, Uğur

Monetary System represents a synonym for modern economic era and its functionality. In order to maintain economic stability it is important to keep major segments of monetary system in balance. Throughout analysis we will first emphasise on nature of money and basic characteristics of it by observing its impact on human nature to reach focal points that could negatively affect monetary system. Since world is reaching toward one unique economic space we must observe it as compact unity in order to react on time to all negative impact that could potentially destabilize international monetary system. Crucial part of the analysis will be based on uncontrolled creation of debt which represents major factor that creates instability on the global and intra-country scale. Since the debt is mostly created throughout generally implemented fractional reserve system we will try to indicate how money multiplier contributes toward debt creation and how it changes over time. Also institutions like IMF and World Bank contribute to excess debt creation by formally providing loans to counties in development that eventually sink into deeper crises. One of the most fragile segments of monetary system is foreign exchange market whose general purpose is often misused by governments’ manipulations that have tendency to provide current economic prosperity for their countries but as the final result provides global economic crises. The role of central banks is crucial in this process and we will see how it contributes to overall activities. Keywords: Monetary System; Money; Debt, Fractional Reserve Banking; Legal Tender Laws; Money Multiplier; International Monetary Fund (IMF); Foreign Exchange Market; Purchasing Power Parity; Central Bank.

Conference or Workshop Item
PeerReviewed

2012-05-31

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