Actual Problems of
Economics and Law




DOI: 10.21202/2782-2923.2021.3.603-627

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Authors :
1. Michael Peneder, Associate Professor
Austrian Institute of Economic Research (WIFO)

Digitization and the evolution of money as a social technology of account

Objective: to research the evolution of money as a social technology of account under digitization.
Methods: dialectical approach to cognition of social phenomena using the general scientific and specific scientific methods of cognition.
Results: Throughout the history of monetary thought, economists have predominantly emphasized the function of money as a medium of exchange along with the intrinsic properties that enhance its salability and credibility as the most liquid store of value. But the social institution of money co-evolves with technology. It is significant that the advent of digital crypto-currencies was initiated by computer scientists and has taken economists completely by surprise. As a consequence, it also forces us to rethink the basic phenomenology of money. In accordance with the views of Wieser and Schumpeter,
digitization brings to the fore the immaterial function of money as a standard of value and social technology of account, which increasingly absorbs its function as a medium of exchange. The potential impact of this on economic policy is huge. The variety of different crypto coins has proven the technical feasibility of competing private currencies as proposed by Hayek. In the long term, however, there is reason to doubt the persistence of intense competition. One must fear that major digital platforms will extend their current dominance in multisided virtual market places to include digital payments and money. Central banks are increasingly anxious to preserve public sovereignty over the common unit of account and are considering issuing their own digital fiat money. After the current era of intense creative experimentation, the potentially new spontaneous order of private crypto-currencies is likely to be supplanted by central bank digital currencies (CBDCs), the design of which will depend on deliberate public choices and policies.
Scientific novelty: the work discloses the provisions of the Austrian theoretical discourse on the proper phenomenology of money, contrasting Menger’s canonical explanation with the ‘heretical’ and largely forgotten views of Wieser and Schumpeter. Also, the work offers a brief look back at the early origins of money and shows that credit and related accounts became important drivers of financial development long before coins were minted. The author examines two major innovations of the current digitization of money: a) the emergence of crypto coins, and b) the probable emergence of central bank digital currencies.
Practical significance: the main provisions and conclusions of the article can be used in scientific, pedagogical and law enforcement activities when considering the issues related to regulation of monetary-credit policy of the states.

Keywords :
Digitization; Evolution of money; Currency competition; General ledger; Crypto coins; Central bank digitial currency (CBDC); Austrian economics

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Citation :
Peneder M. Digitization and the evolution of money as a social technology of account, Russian Journal of Economics and Law, 2021, Vol. 15, No. 3, pp. 603–627. DOI: http://dx.doi.org/10.21202/2782-2923.2021.3.603-627

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