Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
Perspectives of Monetary Systems Development
Andrey V. Bystrov* and Vyacheslav N. Yusim**
In the article, the transformation perspectives of national monetary and
international currency systems are considered.The evolution character of
changing one another benchmarking methods of purchasing power is
substantiated.The classification of money types and monetary system classes
according to a joint classification attribute: benchmarking method of purchasing
power – is offered. The hypothesis of the existence of the law describing the
correlation between the benchmarking method of currency purchasing power and
the economic-technological civilization development level is grounded.It is shown
that a new type of virtual money with a constant purchasing power has to emerge
as the result of this law effect at the national level. At the international level, in
future the same demand for correspondence will firstly bring about the making up
of supranational units of account of regional and political alliances of countries
and then the emergence of supranational world’s currency with a constant
purchasing power.It is substantiated that a purchasing power benchmark will
become the basis of national money with a constant purchasing power, units of
account of regional and political alliances of countries as well as supranational
world’s currency. The principle of such a benchmark creation is considered and it
is demonstrated that the level of the modern technological possibilities lets set it
up and use rather efficiently already at the present moment.It is asserted that the
statement of economic theory concerning the impossibility of purchasing power
benchmark creation does not live up to reality. The authors demonstrate that the
prove of practical possibility of setting up a purchasing power benchmark has
become the verification act of theoretically grounded tendencies of monetary
systems and money type change determining these tendencies.
JEL Codes: E10, E69, F01, F02, F33, F42, O33 and O42
1. Introduction
Only in the XX century, there were four different world’s currencies1. Each time the change
of the currency system was under compulsion. In fact, it was not that a new theoretical
concept regarding the system change ruled the brains but the practical admittance of its
extreme inefficiency, moreover, its practical inability to function caused the change (e.g. the
Bretton-Woods’s system collapse).
By the end of the XX century, it had become obvious that none of the previously
successfully acting world’s currency exchange systems can satisfy either economy or
theory. The three of four acting in the XX century had beendenied because of their
inefficiency. The fourth one is on the way [2, 3, 4, and 5].
The national currency systems do a bit better. The economic theory stands out only two
such types of systems: system of metal circulation and monetary notes system. The latter
*
Dr., Prof. Andrey V. Bystrov, Department of Industrial Econonics, Plekhanov Russian University of
Economics, Russia. E-mail: bistrov-sun@mail.ru
**Dr., Prof. Vyacheslav N. Yusim, Department of Industrial Econonics, Plekhanov Russian University of
Economics, Russia. E-mail: vn62@yandex.ru
1
The Gold Standard system, Paris Agreement of 1867; Gold Exchange Standard system adopted at the
international conference in Genoa, 1922; Bretton-Woods' currency system adopted in 1944 and Jamaican
currency system of Floating Exchange Rates acting since 1976.
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Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
substituted the former one not so long ago, only about one hundred years and has not been
at its resources yet. The surprisingly fast changing world under the strain of technical
progress does not leave any hope for its (monetary system) long-term existence.
By and large the contradictions between money functions as a standard of value and a
payment means; as circulation medium and saving medium; as a standard of value and
world currency are dramatically increasing. The volatility of exchange systems that makes
world economic crises start is going up. The existing exchange currency system does not
suit most countries.
2. The Problem Research
Among the contradictions causing a historic change and upgrading of national currency
systems,there is a market need, on the one hand, to provide exchange of goods and
services by means of circulation, i.e. money, on the other hand, to secure that
moneyexercise its function of a standard of value [6, 7 и 8].
The more the output of the economy is, the higher the production specialization is, the more
monetary units to provide exchange function are demanded. In such a case, the
performance of another currency function, that of a standard of value, requires the provision
of uniformity of measures of commodity cost: the purchasing power parity of each existing in
circulation monetary unit.
There emerges a contradiction between requirements to commodity as a benchmark and
requirements to it as a working measure. In fact, the benchmark must ideally be the only
one but there must be many working measures. Currency exchange systems at the
beginning of their existence as well as the existing ones have developed overcoming this
contradiction.
Exchange costs in authentic exchange systems depended most of all on a type of a
commodity-benchmark which (for example, a sheep) made exchange possible with
substantial costs related to storing, transportation and inconvenience of equivalent
exchange. Moreover, such a benchmark had a very low accuracy as a cost unit; and its
function of a payment means contradicted its function of a saving means.
The situation has radically improved together with the transfer to benchmarking by means of
another commodity – gold. It occurred immediately when there appeared the technical
possibility to compare accurately enough the weighed amounts of gold [9, 10].
At the same time, the way of benchmarking has not changed neither the benchmarking
method nor the method of transfer of a purchasing power unit from a benchmark to working
measure of purchasing power – monetary unit – have changed. A cost benchmark has
remained a unit cost of some commodity (a sheep or a gold measure) as it used to be. The
essence of the method of a transfer of a purchasing power unit to working measure has just
remained the same ever since as the amount of each working measure of value has been
strictly determined by the amount of a benchmarking commodity contained in it.
Alongside with the growth of technological opportunities and corresponding growth of goods
production, the faults initially in-built in this method of benchmarking became obvious. Gold
turned to be in short supply to perform its main function of exchange. It meant that there
occurred the contradiction between market demands in circulation means and possibilities
of monetary system to secure them.
The inner controversy of the monetary system had stood out. The money function as a
circulation means came into antagonism with its functions as a payment means and a
saving means. Money (gold) was washed off the circulation in order to perform the latter two
functions.
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Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
The new technological opportunities (production of hard to forge and long-lasting paper
banknote) made it possible to transfer to a new more efficient type of money. Giving that,
the money function as a measure of value has become to be secured by only a virtual link
with the amount of gold supply stated by financial authorities.
For some time, the above allowed getting rid of the controversy between the market
requirements to money as a means of circulation. The intrinsic contradictions of the
monetary system betweenthe function of money as a means of circulation and its function of
a means of payment and saving also diminished because gold stopped being used by the
population to make transactions.
However, the demand for the provision of the whole volume of money by benchmark
commodity hadalso started to limit the market circulation possibilities. There rose again the
contradiction between a money function as a means of circulation and its function as a
standard of value. The existing monetary system started to slow down the economic growth
again.
The developed countries transferred to a more efficient money type for that civilization
development stage. Money units formally not connected with any real cost benchmark
started to play the part of working measure of value. This type of money established itself in
the XX century and is still valid at the beginning of the XXI century. [12]
Alongside with this money type and technological opportunities and production volume
growth, the contradictions between market needs and possibilities of monetary system of
this type to provide commodity circulation stability are increasing. The monetary system
becomes an instability factor and a hindrance to economic growth. A real life demands its
perfection. The transfer to a next type of money and next class of monetary system is
coming to a head.
3. Methodology and Results
Market Objectives
A market function is to provide an efficient, from a society point of view, commodity and
service exchange that is achieved by more or less successful three objectives’ solution. All
the three are well known and initially attributed to a monetary system.
First objective– decrease and fair distribution of circulation costs. To this end, money was
set up [12]. Its evolution from commodity money like sheep or nails to symbolic banknote or
e-money impresses one with circulation costs decrease directly connected with a money
system.At the same time, a boosting growth of market transactions makes the civilization
consider its reasonable adjustment.
The opportunity to separate such functions as a means of payment and a means of
circulation between different money types can and mustgive national monetary systems a
new and higher quality.
Second objective – also well known, but it is rarely associated with the requirements to a
monetary system. The problem at issue is that market economy builds up its efficiency only
when it gives preference to the most efficient industrial proprietor from the public point of
view [12].
Price allows assessing each manufacturer’s contribution to the well-being and singling out
the most efficient one.
A high bias while measuring a commodity cost makes the market lose its ability to
distinguish the most efficient manufacturer. This is a disaster for a market system. It stops
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Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
facilitating the economic growth because the main growth stimulus– personal commitment vanishes.
The increase in accuracy of labor measures of value – money – is directly connected with
the stability of economy. However, nowthe economic system has run out of its stability
options. The use of money with a constant purchasing power will enrich economy with a
new quality, alongside with traditional, known to everybody, or the so-calledworking money.
A benchmark of purchasing power is necessary to set up such money. New money will
practically play a part of gold without having any of its faults.
Third objective – provision of accurate comparison of purchasing power of various national
currencies. Its practical solution points at the use of supranational benchmark of purchasing
power of various countries’ currencies and, consequently, the use of a supranational unit of
account and then supranational currency.
Nowadays there exist both: a theoretical basis and a practical possibility of making such
benchmarks[1,14].
Link between monetary system and money type
The economic theory characterizing the history of the mature by now monetary systems
distinguishes their two types: national and world, anddistinguishes three main types of
money as the basic feature of the development stages of monetary systems.
Strictly speaking, one cannot consider such classification completely accurate. In fact,
commodity money is secured, without doubt.Secured money turns loosely bound to
commodity values that actually serve as itssecurity. Consequently, a common classification
feature at consideration – a method of purchasing power security - appears substantially
vague.
The fact of the existence of acknowledged but debatable classifications of money types
demonstrates immaturity of theoretical ideas about the mechanism of the rise of the first and
most important money function – a measure of value.
Table 1
The evolution of methods of currency purchasing power benchmarking
Way of fixing a
benchmark
Real
A1
Virtual
A2
Way of transferring a purchasing power unit
Commodity.B1
Market. B2
Method of benchmarking
Method of benchmarking
Real commodity
Real market
A1B1
A1B2
Method of benchmarking
Method of benchmarking
Virtual commodity
Virtual market
A2B1
A2B2
Classification shows that in the market history two ways of fixing a purchasing power
benchmark were used: real and virtual.
In order to transfer purchasing power units from a benchmark to working measures
(banknotes and coins) two methods were also used. They can be marked out as a
commodity one and a market one. The commodity way bears a measure of value in the
commodity itself and the market way renders similar value of any monetary unit due to
market institution pressure. The combination of the way of setting a benchmark and the way
of transferring a purchasing power unit generates the method of benchmarking. There can
be only four methods: method A1B1 or real commodity method; method A2B1 or virtual
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Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
commodity method; method A2B2 or virtual market method and the last one is method
A1B2 or real market method (Table 1).
A real type of money corresponds to the three out of four benchmarking methods that
existed in the history of civilization and marked above. There is a method of benchmarking
not previously used left. Benchmark money corresponds to it.
Ways of benchmark creation
Way
А2
Way
А1
Methods of benchmarking of
purchasing power
MethodА
1B1
Way
B1
Method
А2B1
Forecast
Method
А2B2
Method
А1B2
Way
B2
Way of transferring a purchasing
power unit value
Fig.1. The historic change of benchmarking methods of money purchasing power
The change of benchmarking methods resulted from the conflict resolution between the
demand for efficiency increase of market economy and opportunities of its mature monetary
system. Moreover, in all cases the main reason for the conflict origin is a technical
progress.
If we arrange monetary systems in the efficiency ascending order demonstrated throughout
history, each type of money will be associated with its own method of purchasing power
benchmarking (Fig.1).
Actually speaking it means that under market economy terms there emerges a law like
tendency describing the correlation between the benchmarking method of currency
purchasing power and the economic-technological civilization development level.
As the scheme of historic sequence of benchmarking methods shows (Fig.1), there is only
one method left, which has not been used before. Thus, the next foreseen step of money
evolution will be a transfer to the money relevant to a real market method of benchmarking
А1В2.
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Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
Monetary systems may be divided into classes according to their type of money.The classes
of monetary systems arranged in efficiency ascending order are demonstrated in Table 2.
Table 2
The correlation between monetary systems, benchmarking methods and money type
Money type
Monetary
system
class
Methods of benchmarking of currency purchasing power
A1B1
А2B1
А2B2
А1B2
Secured by
Symbolic
Benchmarked,
Real
commodity
institutionally
institutionally
commodity
symbolic money secured money. secured money.
money
Type
A1B1.
Type
А2B1.
Type
А2B2
Type
А1B2.
Class A
monetary
system
Class B monetary
system
Class C
monetary
system
Class D monetary
system
How can the “real market method bring itself about in reality? What is corresponding to it
class D of monetary systems?
Benchmark method A1B2 assumes the use of the real benchmark of purchasing power of
currencies and market mechanism of its value transfer to a new benchmark currency used
in the economy. Actually speaking, the next stage of efficiency increase of national currency
systems is connected with the introduction of artificial value benchmark, the possibility of the
creation of which the economic theory does not accept.
This also means that it is necessary to introduce money with constant purchasing power to
the economy. Actually speaking it is about setting value analogues of gold used in national
as well as in international monetary systems.
The Comparison of Purchasing Power of National Currencies
There is no doubt that,for the sake of the international trade goals, it is necessary to either
know a numerical value of national currencies purchasing power of the country-participants
of trade transactions or, at least, to know the relationship of their purchasing powers. At the
same time, in order to evaluate the relevant value of currency purchasing power, it is
necessary to use a unit, i.e. a measure or a constant benchmark representing this unit.
The economic theory closely approached the use of a benchmark long ago, while
comparing purchasing powers of various countries’ currencies. The matter concerns the
theory of purchasing power parity.
It originates from the ideas of English economists D. Hume and D. Riccardo. Within the
frames of the theory of purchasing power parity, its logic claims that any currency is to have
similar purchasing power in all countries. In other words, a dollar must allow buying the
similar number of goods both in the USA and Japan, and a yen must allow buying the
similar number of goods both in Japan and in the USA [14].
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Proceedings of Annual Paris Economics, Finance and Business Conference
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ISBN: 978-1-925488-04-3
A Swedish economist G. Cassel is believed to be the first to ground the theory of
purchasing power parity rather in full in 1918.
Samuelson, the Noble Prize Winner, supported him. He wrote, “The correlation change of
exchange rate, given equal conditions is proportionate to correlation change between our
prices and prices abroad” [1, p.514].
However, this means, that it is enough to take any of revealed values of purchasing power
parity for a unit (benchmark) and track deviation of current inflated or deflated prices from it,
in order to calculate the change of a current purchasing power parity of currencies regarding
the benchmark one.
Samuelson's opinion reflects theoretically a completely convincing idea that not the price
ratio itself but its change mustform the values of relevant purchasing power (or a purchasing
power parity) of two national currencies. For example, if a purchasing power of one of them
drops by 40%, according to the ideas of purchasing power essence, exchange rate is also
to change by 40 % in favor of the currency which purchasing power has remained the same.
However, it is considered, that value changes of purchasing power parity do not correspond
to exchange rate, at least, in the middle term of 10-15 year. It wrote,“ If 1970 is a base year,
the price index ratioin 1986 Mexico to price index ratio in 1986 in the USA makes up
32.4…<in the same period>…a peso became 46 times cheaper than a dollar”. That means
that the exchange rate changed 1.5 times more than the price change. The other data from
the same source say that from 1975 to 1987,” the US inflation was on average lower than in
Britain. In compliance with purchasing power parity (PPP) a dollar had to become more
expensive but, in fact, a dollar price to pound sterling dropped… Trade fluctuations and
capital flows explain these discrepancies [1, p.725, 726]. One can draw a conclusion: reality
does not prove practice.
No matter what the reasons for the difference between a theoretically forecast result from a
real one are, one cannot acknowledge the theory as it has not passed the empiric test.
However, not in this case - theory is just, and its difference from practice is explained by the
inaccuracy of empiric result interpretation.
Let us demonstrate that a quotation method at the stock exchange is inaccurate in principle
and its fault may be so high that quotations cannot be used as a method of defining relative
PPP of currencies. This statement sounds nonsense to every highly educated economist.
Market determines the true price of a commodity, does not it? Stock trading is the closest to
a perfect market. That is true because stock trading deals with similar commodities,
moreover, all market players have similar information and there are a lot of buyers and
sellers at the market.
Meanwhile, economic theory [1, 12] does not pay enough attention to the peculiar features
of currency tradingwhich make them hardly valid for public or true assessment of traded
commodities – currencies.
While modelling a classical market it is always assumed that, a seller maximizes his selfish
interests provided there is a demand for his commodities. It is worth emphasizing the
demand caused by public needs for these commodities.
A seller may influence a commodity price (measure of its value) by vote. Moreover, it is
assumed that the commodity value for a buyer is real. In other words, he will not buy more
bread than he can eat, and under the same conditions, he will always buy a cheaper
commodity. Besides, a seller and a buyer do not swap places. Thus, a baker will not try to
buy a just sold loaf of bread and keep repeating this transaction every other minute. In
addition, at the commodities exchange a substantial bulk of buyers and sellers keep doing
just this.
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Proceedings of Annual Paris Economics, Finance and Business Conference
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Moreover, a buyer’s aim at the exchange is not actual needs satisfaction but the same as
that of a seller – current or future profit maximization. In this case, a commodity price
largelyreflects not a relative estimation of actual utility of various goods for most customers
but subjective traders’ expectations of trading results. In the other case,bargains originate
from the result of interest collision of the largest banks and companies – exchange traders,
who represent a negligibly lowpart of the interested parties directly or indirectly connected
with export-import transactions.
As soon as a negligibly low part of exchange traders (even in comparison to all the country’s
exporters and importers) evaluate relative value of currencies, the evaluation result
becomes a law for all participants of international trade relations. Thus, the essence of a
commodity price formed at the real and currency market is different in principle.
Consequently, an objective change of relative PPP of national currencies fixed at a real
market according to PPP value may differ substantially from excessively subjective
evaluation of PPP at the currency trading.
Thus, one can get the closest to real correlation of PPP of different currencies while using
relative values of PPP of currencies and efficient methods of inflation and deflation
meanings evaluation.
The matter deals with the creation of an artificial benchmark of value or money purchasing
power.
4. Methodology Verification
The problem of making up a benchmark of currencies purchasing power is a problem of
saving purchasing power in time. While making all familiar benchmarks there is not such a
problem as either some constant value (for example, a real kilogram of mass) or a value
measured instrumentally in the same way (meter, current load, and permittivity) underlie
them.
The possibility of making a constant in time national benchmark of purchasing power is
justified by the fact that in all developed countries, there is a system of assessmentof
currency purchasing power digression from some uncertain in magnitude but fixed level – it
is a measure of inflation and deflation [18,19].
The very fact of measuring purchasing power digression means that there is a principal
possibility of measuring purchasing power of any national currency in any existing period in
its purchasing power units taken for a benchmark. Let us illustrate the accuracy of such
assertion.
For the convenience of the narration, we have called this benchmark, a unit of fixed
purchasing power of national currency, realis (Late Latin “realis” for actual). The schemes of
the procedures used while measuring length and currency purchasing power by means of a
benchmark are shown in Fig.2.
Both the schemes look identical. However, the result or the aim of measuring differ
substantially. In the first case, the aim of measuring is to express the size of the object with
a benchmark’s value and; in the second case;the aim is to express the size of a benchmark
withan object’s amount value.
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Proceedings of Annual Paris Economics, Finance and Business Conference
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ISBN: 978-1-925488-04-3
National system of measure of length
1 m (meter)
standard
0,6 m
∆m
length
National system of measure of value
1 R (realic)
standard (benchmark)
0,6R
∆R
1 Ruble
Fig. 2 The comparison of measure principles while using a standard of length and standard
(benchmark) of purchasing power of national currency
Actually, in the first case, (length measure) it is important to fix a standard of length (unit), a
meter, then to measure an object. It means a numerical value of the amount of the
measured object needs working out in the values of measure unit (benchmark), i.e. a meter.
For example, let us assume some measured length equals 0.6 cm. It means that this length
equals 0.6 of the benchmark’s amount or 0.6 meter. Correspondingly, the length of the
benchmark is 1:0.6=1.667 times more than that of the measured object.
In the second case, originally, a numerical value of purchasing power is also taken for a unit
but it is possible to fix or restore it only in units of habitual money, the purchasing power of
which is generally different and each time it shapes at the market.
For example, let us assume that on 1 Jan. 2016 purchasing power of an acting Ruble is
taken for a unit. Until there is inflation or deflation, the purchasing power of any Ruble is
equal to one or to purchasing power of a benchmark. However, as soon as something, e.g.
inflation, fixes, the situation changes. If inflation is 40%, that means that purchasing power
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Proceedings of Annual Paris Economics, Finance and Business Conference
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of any acting Ruble is 0.6 of a benchmark. In this case, the value of the purchasing power of
a benchmark in acting Rubles is 1: 0.6 = 1.667 Rubles.
In other words, the possibilityof checking the price growth against the fixed but unknown
value means the opportunity to fix the purchasing power quantity of this value as a
benchmark forever.In order to do this it is enough to work out (express) its value in acting
purchasing power of national currency.
This also means that it is possible to define what amount of monetary units with current
purchasing power corresponds to some constant benchmarking value. It is just what is
happening when usual benchmarks are used.
Actually, the above argument of the accuracy of the theoretically forecast phenomenon of
purchasing power benchmark existence is very simple. This allows any intelligent person to
observe and point at an error in the argument. Otherwise, it is worth considering that the
logic of the drawn conclusions reflects the cause-and-effect relations characterizing
monetary systems development processes.
5. Evaluation
If to consider the regularity of emergence and change of money types and monetary
systems classes, it is possible to predict the features of the coming stage of their
development.
The practical need for efficient transformation of monetary systems has ripened. The current
instability of most countries’ economies manifests this, so do the crisis shaking periodically
the whole world’seconomy [19, 20].
The main function of a benchmark currency is a means of saving. External factors, as well
as miscalculations or government’s behavior led by personal or clang’s interests,end in the
loss of purchasing power of the whole mass of the national currency. It badly influences the
living standards of most population; but it bears most heavily on the poor. Moreover, the
national currency instability has a serious impact on the economic efficiency as it makes it
decrease [21, 17].
At the same time, it is obvious that the chances of the monetary system are restricted in
principle when the same currency exercises four opposing one another functions at a time.
The transfer to the use of two currencies in the national monetary system– operating and
benchmarking – changes the situation dramatically.
The logic of the development of monetary money systems allows asserting that in a new
situation habitual currency must be used like at present. A benchmarking currency must
exercise the function of saving and indirectly the function of non-cash operations.
The national benchmark currency is supposed to operate in the following mode.
1.
The benchmark currency is converted into operating currency at the current rate of
exchange that secures the continuity of its purchasing power.
2.
The benchmark currency is non-cash only.
3.
The benchmark currency cannot be used as a direct means of payment. As a means
of payment it has the status corresponding to foreign currency but much tougher because
all its transactions are fixed and connected with definite legal entities and physical parties.
4.
The benchmark currency circulates exclusively within the state.
Actually, within the state it exercises the main functions of gold without having its faults. Its
amount does not depend upon the natural resources of the country, it cannot be stolen, its
price does not depend upon either demand or supply; or population’s reflection; or selfish
interests of the main players at the stock exchange. Neither the technological resources of
the country nor its gold reserve restricts the need satisfaction for such a currency. Thus, the
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benchmark currency becomes a factor securing the stability of the country’s monetary
system.
However, the importance of making a national benchmark currency matters far beyond the
boundaries of the states because it enables the emergence of a supranational currency.
A currency is necessary to upgrade the international currency system. The critical
weaknesses of the latter including an obvious capability gap, which the system provides its
various participants with, have become so evident that the participants of international
exchange [6] like companies, countries and academic community claim the inefficiency of
the international trade practice [22,23].
There is no doubt that in future the transformation of the international currency system will
take off. Instead of rates of exchange, it will use the relationship of purchasing power of
national currenciesobtained through the system of international benchmarking of national
money purchasing power.
Just to be clear, the evolution of the international currency system will go on gradually as
the economically strongest countries will hinder it. Eventually, the international exchange
will be made by means of real world money of A1B2 type.
For the purposes of international trade it is necessary to know the quantitate value of
national currency purchasing power of the countries taking part in trade transactions or at
least to know currencies’ purchasing power relationship. Herewith, in any case, in order to
denote absolute or relative value of currency purchasing power it is necessary to use a unit
of its measure or a constant benchmark.
At present, world currencies serve such a benchmark, however, gold used to exercise its
function before. Since a benchmark currency exercises the function of gold, as a steady in
time and in different countries measure of value, in full, it is not hard to imagine that its use
in international exchange will enable to solve problems like they used to be solved during
the period of hard money circulation without a stock exchange.
On the ground of benchmarks of national currency purchasing power there appears an
opportunity to make a supranational payment unit and then a supranational benchmark
currency. They will bear the functions of a circulation and payment means in regional,
political and trade alliances.
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