This article explains how analyzing the creation, distribution, and destruction of contemporary credit money is placed center-stage in the emerging field of critical macro-finance. This approach involves not only traditional forms of money but also “shadow money”—private debt instruments which are not regulated as money from a legal standpoint but in many respects are functionally equivalent to “established” forms of money. Shadow money lay at the heart of the 2007-9 Financial Crisis and continues to be one of the “hot potatoes” in the post-crisis monetary system. To connect different positions in this discourse, we propose three core criteria for defining shadow money as a baseline position for future critical macro-financial research.
Tobias Pforr, University of Reading