Central bankers and mainstream monetary economists have become intrigued with the idea of reducing, or even entirely eliminating, hand-to-hand currency. Yet the arguments for phasing out cash or confining it to small denomination bills are, when not entirely mistaken, extremely weak. In a new paper, Cato scholar Jeffrey Rogers Hummel argues that proponents of restricting cash appreciably oversell any advantages and ignore or understate the severe disadvantages.
In less than a decade, cryptocurrencies have moved from the fringes of financial market activity to a $300 billion asset class traded on exchanges and owned by mainstream investors. Yet a great deal of regulatory uncertainty still surrounds cryptocurrencies. A new paper from Cato scholar Diego Zuluaga discusses how cryptocurrencies fit established regulatory practice, and proposes a framework to provide greater regulatory certainty to market participants and enable the growth of this new technology while fulfilling the policy objectives of the relevant regulatory agencies.
In the search for stable money, reform proposals that may seem farfetched today may become feasible in the future.
Lower scores are meted out for less stringent (read: arbitrary and restrictive) requirements.
Philosophers distinguish a merely valid argument – the conclusion follows from the premises – from a sound argument, which is both valid and has true premises. Arguments that assume perfect substitutability among cryptoassets may be valid, but they are not sound.
Among many other advantages it enjoys when it comes to influencing the course of monetary reform, the Fed has that of being able to shift the constraints that determine whether a proposed reform is or isn’t possible.
The myopia hypothesis predicts that: 1) stock markets undervalue firms that sacrifice short-term profitability for longer-term growth 2) firms will therefore rationally forego long-term investments such as research and development (R&D) and capital expenditures (CAPEX). In this post, I critically examine the evidence for such claims.
January 7, 2019
January 7, 2019
January 3, 2019
December 27, 2018
By Nik Stoop and Peter van der Windt. Research Briefs in Economic Policy No. 145. January 9, 2019.
By Charles Calomiris and Sophia Chen. Research Briefs in Economic Policy No. 144. January 2, 2019.
By Derek Bonett. Working Paper No. 55. December 13, 2018.
By Derek Bonett. Working Paper No. 54. December 11, 2018.
The Glass-Steagall Act was enacted in 1933 in response to banking crises in the 1920s and early 1930s. It imposed the separation of commercial and investment banking. In 1999, Glass-Steagall was partially repealed by the Gramm-Leach-Bliley Act. When the United States suffered a severe financial crisis less than a decade later, some leapt to the conclusion that this repeal was at least partly to blame. In a new study, international financial regulatory expert Oonagh McDonald argues that the notion that repealing Glass-Steagall caused the financial crisis, and that bringing it back would prevent future crises, is not supported by the facts.
As cryptocurrencies hit new highs, is federal regulation far behind? And if it is, can regulators really do anything to crack down on these decentralized networks? Jerry Brito of Coin Center offers an analysis.
After more than nine years of unconventional monetary policy, it’s time to question the Fed’s strategy and offer new ideas for the future of monetary policy. At Cato’s 35th Annual Monetary Conference, leading scholars, policymakers, and journalists examined the case for a rules-based international monetary system, considered steps to normalize monetary policy, debated the future of currency, and explored China’s future in the global monetary system.
Ten years after the 2008 financial crisis, we are again facing the possibility of economic turmoil as the Fed and other central banks exit their unconventional monetary policies. Although central banks will move gradually, unforeseen circumstances could trigger a flight to safety and a collapse of asset prices. Please join our distinguished speakers on Thursday, November 15, to discuss these and related issues.
In an uncertain world, discretionary policy based on macroeconomic models is risky. Economic complexity can lead to errors, which in turn can lead to instability. In the latest issue of Cato Journal, Cato scholar James A. Dorn argues for moving to a rules-based system, possibly reducing the frequency of policy errors.
In testimony before the House Financial Services Committee, Cato scholar George Selgin examines the proposal for giving the Federal Open Market Committee the responsibility of setting interest rates paid on banks’ excess reserves.
