Modern monetary systems with a single unit of account associated with a single issuing entity (a central bank) has developed to deal with the problems of the pre-modern system; inefficiency in payments, lack of the lender of last resort (LLR), need for coordination with other macroeconomic policies such as fiscal and exchange rate policy. However, as we have not solved these problems yet in the 21st century (Goodhart and Jensen 2015),(fn.1) it is worthwhile to look back at the critical moments in the development of modern monetary systems.

This session explores how modern monetary systems emerged and developed from a variety of pre-modern arrangements. To this end, the session focus on 1) driving forces for monetary reforms such as crises and political changes, 2) reforms, especially the integration of theory and practice of money, and 3) consequences of reforms such as changes in the policies, regimes and institutions.

The session aims at combining monetary history with the history of economic ideas and debates. The session put together inquiries contributing with empirical historical new data and the analysis of theoretical thinking of money and its application in a variety of contexts. By bringing together cases from different parts of the world and different time periods we aim to unveil general patterns of the basis for well working monetary systems given different contextual settings.

In the pre-modern periods, agents used different monies for different transactions (Kuroda 2008).(fn.2) The modern monetary system provided a single unit of account, hence, a single standard of value in the economic term. At the same time, we have lost alternative ways of expressing values. Recent movements towards the development of local currencies and crypto currencies may be seen as attempts at restoring alternative value systems also into modern monetary systems.

Monetary reforms were often implemented to deal with crises. To name a few, Bank of England gained the monopoly of note issuance within the debates over the stabilization of the value of currency after the Napoleonic War; The U.S. Federal Reserve System was established after the banking panic in 1907. Reforms were often associated with sweeping political changes such as independence and revolution. For example, Japan in the late 19th century and China as well as Latin America in the early 20th century conducted monetary reforms within the wide range of political and economic reform for modernization.

From Nicholàs de Oresme in the 14th century to contemporary monetary economists and policy makers today, monetary thinkers have played a pivotal role not only in building monetary theories but also in translating the theories into practical reforms. The term “money doctor” is often referred to as an adviser who engaged in implementing monetary reforms. We redefine the term in a broader sense as “a person who, with theoretical and practical knowledge, advices on how to build a stable monetary and financial system.” Advices may have or may not have been implemented, and if implemented, reforms may have succeeded or failed.

footnotes:
1) Charles Goodhart and Meinhard Jensen, “Currency School versus Banking School: an ongoing confrontation,” Economic Thought, 4 (2), 2015, pp.20-31.
2) Akinobu Kuroda, “What is complementarity among monies? An introductory note,” Financial History Review, 15 (1), 2008, pp.7-15.