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Christine A. Desan, Money's Design Elements: Debt, Liquidity, and the Pledge of Value from Medieval Coin to Modern "Repo" (Harvard Pub. L. Working Paper No. 21-31) (Banking Fin. L. Rev. v. 38, forthcoming 2022).


Abstract: Across the ages, moneys exhibit a recurring set of design elements: they are made of debt; that debt is specifically fashioned to create liquidity; and the debt medium that results comes with a pledge of value (commonly collateral, convertibility, a commitment of public faith, and/or insurance) to enhance its credibility. While those design elements appear again and again, they vary greatly in form. Debt, for example, can be structured as a straightforward liability or issued by agents (e.g., a central bank acting for a government). Every difference in design changes the dynamics of the medium and the way people treat it. Every difference in design thus affects exchange, its societal context, and how value travels. Like the law of payments, the legal design of money shapes the economy itself. [This essay is written as part of a festschrift for Professor Benjamin Geva.]