Dr. Steffen Murau

Private credit money accommodation is a theory on the long-run transformation of the modern credit money system. During financial upswings, new forms of private credit money emerge as “shadow money”. At the end of the boom, they implode in a systemic financial crisis. When the state steps in and guarantees them, they are “accommodated” into the public money supply. Public money today is accommodated private credit money of the past.

The international monetary system of the 21st century should be understood as Offshore US Dollar System. This arrangement has gradually evolved since the 1950s and replaced the state-planned Bretton Woods System when it collapsed in the 1970s. Today, international monetary affairs are primarily organized through private banks and shadow banks that use the US dollar as the unit of account and operate offshore, outside of the US monetary jurisdiction.

The European Monetary Union is a unique experiment in monetary history. Its initial design only made central bank money truly European, but left commercial bank and shadow bank money predominantly national. After a decade of smooth sailing, it entered into crisis mode in 2009 and has never fully recovered. Through endogenous change and political interventions, it now has an architecture that nobody has planned. It is continuously transforming and difficult to govern.

The Green Transition to net-zero carbon emissions is the greatest challenge of our age. We broadly know what technically needs to happen, but where should the money come from to pay for it? Financing large-scale transformations is a process that requires macro-financial governance, which involves manufacturing an initial balance sheet expansion, organizing long-term funding, stabilizing against financial crises, and facilitating an orderly final contraction.