Currency hierarchy and underdevelopment

Artikel

Money in capitalism is a social force which exists not only on the level of wealth owners, but is also a force which stimulates economic development (or fails to do so). According to Hajo Riese the asset-protecting function of money, which can be expressed in a liquidity premium, indicates different qualities of money. At the top of the hierarchy are a small number of currencies which take over national and international functions; at the bottom are currencies which only partly take over national functions. Countries issuing these currencies suffer from dollarisation and capital flight. The consequence is that they cannot have a strong and sustainable Schumpeterian credit–investment mechanism. External credit seems to be a solution, but external debt together with credit dollarisation leads to a fragile domestic financial system and the likelihood of overindebtedness. A poor quality of money is one key element in explaining the reproduction of underdevelopment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: European Journal of Economics and Economic Policies: Intervention (EJEEP) ; ISSN: 2052-7772 ; Volume: 19 ; Year: 2022 ; Issue: 2 ; Pages: 238-259

Classification and Topics

• Classification: Wirtschaft ; Economic Impacts of Globalization: Economic Development ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• Subject: currency hierarchy ; dollarisation ; underdevelopmentE42

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Herr, Hansjörg ; Nettekoven, Zeynep
• Event: Veröffentlichung
• (who): Edward Elgar Publishing
• (where): Cheltenham
• (when): 2022

Further information

• DOI: doi:10.4337/ejeep.2022.02.06
• Handle: http://hdl.handle.net/10419/277548
• Last update: 10.03.2025, 11:44 AM CET