Técnicas básicas de comunicación no verbal.

Building on work by institutional economists on transaction costs and uncertainty, scholars such Michel Aglietta (2002) and Curzio Giannini (2011) describe central banks as the manifestation of the ongoing struggle of societies to deal with the funda- mental problem of trust in money – “trust in its future purchasing power and trust in the continued convention that payment is complete when money changes hands” (Gi- annini 2011: xxv). Without exception, central banks have confronted this task by as- suming two broad functions – the “micro-function” of supervising and safeguarding (as the lender of last resort) the stability of the banking system and its individual

members, and the “macro-function” of managing monetary conditions in the interest of exchange rate and/or price stability (Goodhart 1988: 5; Capie 1997: 25). Contrary to the public image of monetary policy as a macroeconomic instrument, the micro- function actually took historical precedent (Goodhart 1988: 5; Hellwig 2014: 15). It was when the banking sectors in London and New York grew larger and more sophis- ticated that the private sector arrangements to guarantee financial stability proved in- sufficient (Gorton 1984, 1985), which led to the centralisation of note issuance (via the Bank Charter Act of 1844 in the United Kingdom) and to the foundation of new central banks (the Federal Reserve in 1913).144

Thus, the institutional innovation of central banking occurred in reaction to the destabilising consequences of the power of private bank lending and note issuance.145 While this underlying source of instability has remained the same, the techniques of restraining (public and private) money creation have changed with the ‘evolution’ of money. Routinely used by monetary historians (Carruthers/Babb 1996: 1558), the bio- logical metaphor of evolution captures the historical succession of increasingly ab- stract forms of money and increasingly complex banking systems rather well. For the notion of a relatively linear trend towards more abstract monetary forms certainly ap-

144._{With the notable exception of Britain, publicly owned, national central banks are “essentially a} twentieth-century phenomenon” (Capie 1997: 24). Since the beginning of the 20th century, at which point 18 central banks existed, the number has grown steadily – there were 59 central banks in 1950 and 161 in 1990 (Capie 1997: 24-25).

145._{Note that a distinction must be made between the specific historical origins of the first central} banks and the responsibilities they subsequently assumed. The early central banks were set up by gov- ernments in order to improve their access to financing and to unify and centralise note issuance and metallic reserve management (Goodhart 1988: 4-5). It was only later that these banks – which in some cases had started out as private entities – gradually adopted the task of macroeconomic management that is commonly associated with central banks today. This historical nuance has been duly ignored by those who, like Friedrich von Hayek and James Buchanan, see central banks primarily as the fiscal agents and accomplices of the government. According to Giannini, these adherents of a “‘fiscal’ theory of central banking” have failed to recognise that “identifying the contingent factors that lead to the cre- ation of this or that issuing bank is not the same as searching for the evolutionary mechanism that pro- duced what we now term a central bank” (Giannini 2011: xxi-xxii).

plies to the period since the industrial revolution, which saw a unidirectional move- ment from ‘full-weight’ metallic coins (commodity money), to gold-convertible (and therefore still commodity) paper money under the various gold standards, to pure pa- per (i.e., fiat) money.146 _{Georg Simmel correctly foresaw this development as early as} 1900 – when the international Gold Standard was still intact – yet was doubtful re- garding the feasibility of its “conceptually correct” end point:

It is not technically feasible to accomplish what is conceptually correct, namely to transform the money function into a pure token money, and to detach it completely from every substantial value that limits the quantity of money, even though the ac- tual development of money suggests that this will be the final outcome.

(Simmel 2011: 176) The trade-off hinted at in this passage forms the heart of the institutional economics account of the co-evolution of money and central banking: the trade-off between the economic advantages of more abstract forms of money – lower transaction costs and greater policy flexibility – and the ever more sophisticated institutional arrangements needed to provide the social trust and confidence required by such increasingly fiduciary forms of money (Aglietta 2002; Giannini 2011: 27-28).147 _{It is worth point-} ing out that the ‘fiduciary character’ of fiat money does not depend on a sociological worldview. The economic reason why commodity money can do with a ‘smaller amount’ of trust is that “it is an asset to its holder but a liability to no one” (Moore

146._{This is not to deny the long-term swings between commodity money and credit money described} by David Graeber (2011). It should also be noted that while credit-based payment technologies had ex- isted in Europe since the late middle ages, these had been limited to the wholesale merchant sector until the late seventeenth/early eighteenth century, when, starting in England, credit money became wide- spread within sovereign monetary spaces (Ingham 2004: 121-131; Giannini 2011: 38-39).

147._{Nevertheless, the history of monetary forms and arrangements cannot beexplainedon grounds of} efficiency alone. In particular, Ingham (2004), using Michael Mann’s concept, shows how this history is driven by the struggle between debtors and creditors, between the state and its financiers, for “infra- structural power”. However, Ingham does not deny that the move towards credit money poses consid- erable institutional challenges in relation to the provision of trust and confidence. For a critique of Ing- ham’s power struggle theory of monetary history, see Goodhart (2005).

1988: 13). Fiat money, in contrast, exists only as a liability to its issuer. The circula- tion of theses debts as money requires their issuer to be trusted by the users of money.

It should therefore not surprise us that the replacement of metallic commodity money by gold-convertible paper money during the late 19th _{century coincided with} the rise of the modern national state. For not only did governments of that period have their own (nationalistic) reasons for joining the international gold standard (Helleiner 1999: 140-145), but national states were also the first polities that had theinstitutional capacityto implement the shift towards fiduciary money at all levels of the economy (Giddens 1985: 155-158). Subsequently, the postwar international monetary agree- ment of Bretton Woods, under which all major currencies where pegged to the dol- lar – the only currency that retained its gold convertibility at the old interwar price of $35 per ounce – constituted a further step towards abstraction.148_{It was only in 1971,} when President Nixon announced the closing of the gold window, that all money be- came fiat money.149

While the problem of monetary trust would have come to the fore in any case un- der these new conditions, the ‘Great Inflation’ of the 1970s made sure the it did so in a rather dramatic fashion. The result was a shift of the gravitational centre of the mone- tary order from the international to the national sphere, and thus a ‘central bank-cen- tric monetary order’ under which the burden of restoring trust in the new pure fiat money standard fell disproportionately to central bankers (Aglietta 2002: 50).150 _Over

148._{Note that after 1933 dollar convertibility applied only to foreign central banks, not to individuals.} 149._{In light of “the elimination of gold reserve requirements for Federal Reserve deposits in 1965 and} Federal Reserve notes in 1968” Friedman (1992: 250) judged that Nixon’s closing of the gold window “simply set the seal on an ongoing process”. See also Redish (1993).

150._{Hall (2008: 167) cites a 1999 New York Times article titled, “Who needs gold when we have} Greenspan?”.