HomeDespre ECTAEventsPolitica editorialaTrimite un articolParteneri / link-uri utileArchiveAbonamentContact

ISSN 1841-8678   (print)
ISSN 1844-0029   (online)


Archive ECTAP

Note: for the period 1994-2003 the archive of the magazine will not be available online

Supplements ECTAP

If you cannot open the pdf file you need Adobe Reader.
download Adobe Reader

Creative Commons License

Theoretical and Applied Economics
No. 2 / 2023 (635), Summer

The future of money and the money supply

Bucharest University of Economic Studies, Romania
Mădălina-Gabriela ANGHEL
"Artifex" University of Bucharest, Romania
Ștefan Virgil IACOB
Petroleum-Gas University of Ploiesti, Romania
Bucharest University of Economic Studies, Romania

Abstract. In this article, the authors sought to determine what the future of money will be compared to the money supply currently in circulation, but also to the digital system that will be introduced in the economy. The preference for money, especially for fiat money, starting in 2000 and accentuated from 2002, reaching by the end of 2021 a market capitalization of cryptocurrencies that is, from known data, 1.4 trillion euros. Total market capitalization slowed in the latter peak of 2018, with activity outstripping the euro position in the traditional foreign exchange market.

Volatility is an important driver of price. Given the absence of a sovereign guarantee, the bank is willing to engage in more speculative activity. This implies that the introduction of backup generation would reduce volatility. Furthermore, a regulatory system aimed at protecting the currency and preventing speculative attacks would increase the reliability and efficiency of this alternative money.

Given the cross-border nature and use of cryptocurrency, the regulatory architecture would require international coordination, both in terms of compliance and oversight duties as advocated by the International Monetary Fund.

In international specialized studies, a number of benefits that Block-chain technology brings are considered. Most prominent is its decentralized nature which makes it less prone to corruption and more sustainable. Another important benefit is that Block-chain transactions are less expensive and faster than those normally transacted in fiat currencies (current currencies).

There are recent developments in Block-chain that indicate that it can play a very important role in future payment systems. One of the last major benefits of blockchain is that payments are validated. Bitcoin and other digital currencies may change the function of money, however. From a macroeconomic point of view cryptocurrencies represent a risk for monetary and financial stability. From a microeconomic perspective, they involve a risk for investors who could risk all their money, namely, due to extremely fast exchanges from day to day, digital instruments devalue or become less valuable. Stablecoins can be seen as an intermediate solution between privately issued cryptocurrencies and central bank digital currency.

Given the volatility of cryptocurrencies, as well as the rest of CPTC, stablecoins have come to the fore as a potential third title that aspires to bring stability to the volatile cryptocurrency market. Money plays a fundamental role in the money supply. Before discussing the evolution of money and the role of digitization of cash and cryptocurrencies, we must first go back to the basics and define money in terms of its role and functions in an economy.

The very large literature offers a number of aspects but nevertheless there is common ground that economic schools would agree on and that is the function of money in modern economies. In this sense, it is understood that money can change its form and transactional nature without fundamentally changing its function or role in the economy.

There is broad agreement that the functions of money can be divided into three layers, primary, secondary and tertiary, where each layer reflects the descending degree of direct functionality, but also the increasing degree of generality and transactionality of the role it plays. Primary functions refer to them as a medium of exchange and measure of value. Secondary functions reflect their role in the standard store of value for payments. The tertiary layer reflects its contingent functions such as credit base, liquidity of national wealth, distribution of income and measure or maximization of utility. The most common function attributed to money is that of money as a medium of exchange because it facilitates the trading of goods and services between various people.

Based on the study of a wide bibliography, the authors concluded that money also serves as a common measure of value. The values of various commodities are expressed in terms of money. This is, as a number of economists call it, the accepted and standardized universe.

Keynesian economists have established that the function of money as a store of value is one of the most important. In this sense, money becomes an asset and thus currency, or cash, becomes the most liquid form of asset, i.e. money can be very cheap and immediately exchanged for goods and services, and their value is established at least for at least a short period of time. The money can be viewed and considered, by standardization, a deferred payment. This is the basis of credit trading. Money is the basis of the distribution of production in consumption among the various factors, but primarily the basis of the distribution of production for investment and consumption.

The role of money does not seem to be changed with the introduction of virtual money, it still performs the same fundamental functions and remains closely linked to the market for goods and services. The forces that determine the equilibrium level of money and employment continue if the bringing together of these forces in a single or virtual market does not fundamentally alter their functions.

Macroeconomic aggregates in the euro area play an essential role. Since 1970, these aggregates have also referred to nominal money in the usual way, but also to the possibility of narrowing the sphere of liquid money, simultaneously with the appearance of other forms of money.

According to the official statistics of the Central European Bank, monetary aggregates are M1, i.e. the sum of currencies in circulation plus demand deposits; M2, which is equal to M1 plus term deposits with a maturity of up to 2 years, plus repayable deposits of up to 3 years; and M3, which is equal to M2 plus repurchase agreements, plus shares of money market funds, plus debt securities with maturities of up to 2 years. While the share of M2 in M3 has decreased over time, in parallel the share of M1 has increased since the beginning of 2000, aspects presented graphically for easier understanding.

In the study carried out, the authors used a series of existing data at the World Bank, the International Monetary Fund, a series of other sources as well as the materials of some specialists in the field, which were mentioned in the Literature Review.

The growth rates of the structure of monetary aggregates represent a precise trend of the perpetuation of cryptocurrencies, the emergence of digital currencies and the system of macroeconomic monetary aggregates.

Internationally, it can be seen that in 2020-2021 the cryptocurrency market followed the same course as the euro currency. At the same time, as the total market capitalization increases it has slowed down somewhat, and after 2018 the course has resumed further.

In the study carried out we used existing data at the European Union, data published by specialists and we used the logic, interpretation, association and interpretation of macroeconomic monetary aggregates, to achieve our proposed objective regarding the future of money and the money supply.

Keywords: money supply, digital system, cryptocurrencies, economy, financial market.

Download the full article:  


Open acces




The Economicity. The Epistemic Landscape, Marin Dinu, 2016


ISSN 1841-8678 (ediția print) / ISSN 1844-0029 (ediția online)
© Copyright Asociația Generală a Economiștilor din România (AGER) / General Association of Economists From Romania  (GAER)
Redacția: 010702, București, Calea Griviței nr. 21, sector 1, E-mail:

© 2006-2023 AGER