Development of Friedrich von Hayekʼs theory of private money and economic implications for digital currencies
Alexey Yu. Mikhaylov
TERRA ECONOMICUS, 2021, Vol. 19 (no. 1),
The purpose of the research is to analyze the formation and development of Von Hayekʼs theory of private money and its application in the conditions of the digitalization. The theory of private money and the concept of political economy may become the fundamental basis for the circulation and pricing of central banks digital currencies (CBDC) in the near future. In this case, central planning should solve the problem of distributing money among different segments of the population, in order to avoid a significant amount of private money in well-off segments of the population. Hayekʼs concept supports the introduction of an unconditional basic income (Zwolinski, 2019), where fixed amounts of government payments are distributed to all citizens through a monetary system, which is relevant during the COVID-19 pandemic. The article concludes that the international nature of digital currencies will make both developing and developed economies vulnerable to “digital dollarization”, when the national currency is replaced by the currency of the digital platform. Digitalization of money increases the importance of competition between private and public money. In the digital economy, cash can actually disappear, and payments can center around social and economic platforms, weakening traditional monetary policy channels. Governments may to ask central banks to use CBDC in order to maintain monetary policy independence. The article confirms that stable digital money is preferable for foresight, calculation and accounting. Hayek supported the idea of the manipulating the amount of money to stabilize the purchasing power.
Citation: Mikhaylov, A.Yu. (2021). Development of Friedrich von Hayekʼs theory of private money and economic implications for digital currencies. Terra Economicus 19(1): 53–62. (In Russian.) DOI: 10.18522/2073-6606-2021-19-1-53-62
Keywords: private money; economic growth; financial development; financial depth; economic monetization; political economy
JEL codes: B24, B25, G01, G28, E44
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Publisher: Southern Federal University
Founder: Southern Federal University
Founder: Southern Federal University