Going beyond monetary constitutions: The congruence of money and finance

Joshua R. Hendrickson, Alexander W. Salter

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


We extend the literature on ‘monetary constitutions’ by arguing that binding rules must go beyond specifying the behavior of the monetary authority. Instead, a genuine monetary constitution must also be a financial constitution: it must take into account the natural and evolved links between money and banking, treating them as a single institution. We present a unified conception of money and banking, show how modern monetary institutions have severed the traditional links between money and banking, and discuss how macroeconomic stability is an unintended result of a self-enforcing constitution for the money-and-banking system. Finally, we conclude by discussing the implications of our argument for re-orienting the conversation on post-financial crisis stability towards genuinely institutional solutions.

Original languageEnglish
Pages (from-to)22-28
Number of pages7
JournalQuarterly Review of Economics and Finance
StatePublished - Aug 2018


  • Commodity standard
  • Depositors
  • Extended liability
  • Financial constitution
  • Macroprudential policy
  • Monetary constitution


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