This chapter deals with two problems: the economic justification of the use of money and the institutional framework of a money economy. The two are closely interrelated. We shall analyze both in terms of the concepts of institutional economics developed in the preceding chapter. In particular, we shall use, in addition to the traditional transaction costs approach, the concepts of a legitimate order and its guarantee to explain the use of money. First it will be useful to describe and systematize the institutional framework of a money economy. Next we shall give reasons for the use of money and the existence of its institutional framework - the currency order. Finally we shall deal with the guarantee of the currency order, i.e., with the relation between the state and the currency.
KeywordsTransaction Cost Central Agent Paper Standard Currency Community Price Target
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