There has been a continuing debate between those who argue that a currency’s value is based essentially on the power of the issuing authority (“Cartalists”) and those who argue that the value depends primarily, or solely, on the intrinsic value of the backing of that currency (“Metallists”). An associated debate exists between those who have argued that money evolved as a private-sector, market-oriented response to overcoming the transactions costs inherent in barter—call them “Mengerians,” after Karl Menger (1892), who anticipated most of the more formal subsequent models by such economists as Brunner (1971), Alchian (1977) and, more recently, Kiyotaki and Wright (1989)—and those who argue that the state has played a central role in the evolution and establishment of money.

New Analytical and Policy Developments: New Analytical and Policy Developments