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E-Barter vs. Fiat Money: Will Central Banks Survive?

F.H. Capie, Dimitrios P. Tsomocos,  Geoffrey E. Wood


New technology in computing has led some to suggest that the ability to settle transactions electronically will develop to such an extent that money disappears from use.  Two versions of this belief exist.  One maintains that there will be “e-money”, issued conceivably by many organisations, and that this will replace central bank money.  The other suggests a still further development – that the very concept of a medium of exchange may become redundant, as assets or goods can be exchanged directly for other assets or goods through use of computing.  In this paper we argue that the information-economising properties which allowed money to develop will also allow it to survive, despite actual and hypothesised technical progress.

 JEL classification:  E42

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