This article explores the effects of the political reactions to the 2007–2009 financial crisis on the monetary system. It chimes in with the view that shadow banks create ‘shadow money’, i.e. private substitutes for bank deposits. The article analyses how the three main forms of shadow money – money market fund shares, overnight repurchase agreements and asset-backed commercial papers – were affected by the short-term government intervention and medium-term regulation during and after the 2007–2009 financial crisis in the United States. The analysis reveals that the measures taken between 2007 and 2014 integrated some shadow money forms in the public money supply. In the year after the Lehman collapse, the initially private shadow money supply was either publicly backstopped or de-monetised as it had broken par to bank deposits. The public backstops took on the form of emergency facilities established by the Federal Reserve and guarantees proclaimed by the Treasury. Those backstops imply that the public institutional framework to protect bank deposits was extended to some forms of shadow money during the crisis. This tendency has continued in post-crisis regulation. Accordingly, the 2007–2009 financial crisis has triggered a paradigmatic change in the monetary system, attributable to the political decisions of US authorities.
2018 | ‘The Future of Offshore Dollar Creation. Four Scenarios for the International Monetary System by 2040’ (with Joe Rini and Armin Haas)
In order to sketch the possibility space for the future setup of the International Monetary System (IMS), this paper develops four different scenarios that outline potential outcomes of the IMS’s evolution by 2040. These scenarios […]
2017 | ‘The Political Economy of Private Credit Money Accommodation. A Study of Bank Notes, Bank Deposits and Shadow Money’, PhD thesis
Private credit money forms are debt instruments that co-exist alongside publicly provided forms of money and emerge de-centrally out of the lending activities of banks or non-bank financial institutions. In normal times, they are easily […]
2013 | ‘Germany and the Crisis of the European Monetary Union. A Phenomenology of Causal Narratives in the German Discourse on the Eurocrisis, 2010-2011’
In the years 2010 and 2011, the Eurocrisis was among the dominant topics in Germany’s political debates. A number of points remained highly contested: What dangers does the Eurocrisis imply for the European Monetary Union […]