Just Money. Sovereign Money System and the Ethics of Banking
Summary
One of the monetary reform proposals put forward after the financial crisis of 2008 is Sovereign Money System (SMS). The purpose of this thesis is to discuss its normative aspects. Firstly, several theories of banking are presented, and it is analyzed how the pro-cyclical functioning of banks leads toward the emergence of economic crises. Secondly, the role of Sovereign Money System is discussed as a possible institutional remedy. Then, the proposal is divided into two constitutive elements: access to safe digital money and full state provision of money. The main claim of the thesis is that the former is desirable, while the latter is not. In defense of the former claim, it is asserted that the payment system, on which safe digital money accounts depend, is a public good, and thus needs to be provided to each citizen. Accordingly, it is defended that this access will increase aggregate social welfare. In defense of the latter claim, several episodes where public institutions have acted undemocratically and as bad managers of money supply are recounted. These examples purport to show the hastiness of equating democracy with institutions genuinely acting in the public interest. Lastly, a more moderate alternative to SMS is proposed.