Modelling a Sovereign Money System
A number of modellings – based on different approaches such as DSGE, systems dynamics and stock-flow-analysis – came up with basically convergent findings. Sovereign money would not only be safe, but also bring about significantly more financial and economic stability, non-volatile normal interest rates and low inflation. Financial assets and debt would not grow in disproportion to GDP. Not least, a higher level of output and employment would be achieved.
Klaas van Egmont /
Bert de Vries
2024. Reforming the Eurozone financial system: a system-synamics approach.
International Review of Financial Analysis 93 (2024). Full article available at
https://doi.org/10.1016/j.irfa.2024.103192
2018. Dynamics of a sustainable financial-economic system, Sustainable Finance Lab Utrecht University, Working Paper, May 2018.
New DSGE modelling by Michael Kumhof et al. finds that CBDC issuance of 30% of GDP improves financial stability and increases output and welfare by around 6% and 2%, respectively. (CBDC Policies in Open Economies, BIS Working Papers, no. 1086, April 2023).
In the video on the left Kumhof presents the model and the results. (Webinar by Positiva Pengar, Sweden, State Issued Digital Currencies, May 2023, presenter Samuel F. Kazen).
Lainà, Patrizio. 2018. Full-Reserve Banking. Separating Money Creation from Bank Lending, Academic Diss., University of Helsinki.
Lainà, Patrizio. 2015. Money Creation under Full-Reserve Banking: A Stock-Flow Consistent Model, Levy Economics Institute Working Papers, No. 851, Oct 2015.
Andresen, Trond. 2018. On the Dynamics of Money Circulation, Money Creation and Debt. A Control Systems Approach, Academic Diss, Norwegian University of Science and Technology, Trondheim.
From Debt Money to Public Money. Modeling the Transition Process, by Kaoru Yamaguchi, Professor of Economics and System Dynamics, Kyoto, Japan.
Yamaguchi, Kaoru 2015: Money and Macroeconomic Dynamics. An Accounting System Dynamics Approach, Awaji Island: Muratopia Institute/Japan Futures Research Center. www.muratopia.org/Yamaguchi/MacroBook.html.
Yamaguchi, Kaoru and Yamaguchi, Yokei 2016: The Heads and Tails of Money Creation and its System Design Failures, shows the dynamics of the present bankmoney regime and those of an alternative public money system.
Benes, Jaromir / Kumhof, Michael 2012: The Chicago Plan Revisited, IMF Working Paper WP/12/202. A revised draft dates from February 12, 2013.