Revisiting the Properties of Money

TL;DR

This paper comprehensively reviews and expands the properties of money, including digital currencies, to understand their role in future monetary equilibria and currency competition.

Contribution

It provides the first exhaustive categorization of physical and digital money properties, integrating economics and computer science perspectives.

Findings

Expanded properties framework includes societal and regulatory objectives.

Classified properties of physical and digital currencies.

Highlights importance of properties in future monetary competition.

Abstract

The properties of money commonly referenced in the economics literature were originally identified by Jevons (1876) and Menger (1892) in the late 1800s and were intended to describe physical currencies, such as commodity money, metallic coins, and paper bills. In the digital era, many non-physical currencies have either entered circulation or are under development, including demand deposits, cryptocurrencies, stablecoins, central bank digital currencies (CBDCs), in-game currencies, and quantum money. These forms of money have novel properties that have not been studied extensively within the economics literature, but may be important determinants of the monetary equilibrium that emerges in the forthcoming era of heightened currency competition. This paper makes the first exhaustive attempt to identify and define the properties of all physical and digital forms of money. It reviews both the economics and computer science literatures and categorizes properties within an expanded version of the original functions-and-properties framework of money that includes societal and regulatory objectives.