Question

Money should essentially be perceived as an instrument that allows an increasingly widespread and anonymous economic society to deal with the inevitable resulting shortcomings in information and trust of each of the members on the others.’ (Goodhart) Explain and discuss.

Answer 1

In the earlier phases money is considered as the only instrument of exchange which is opion for barter system where goods and services are exchanged against the other goods and services without of any medium of exchange also called as gift economy. Inefficiency of barter leads for emergence of money.

Charles Albert Eric Goodhart, CBE, FBA is a British economist. He was a member of the Bank of England's Monetary Policy Committee from June 1997 to May 2000 and a professor at the London School of Economics.

Charles Goodhart basically ecxplains three issuies related to money that is meaning of money that is its role which is basically means of payment and how it changed over the time, the nature of the demand of money and the transmission mode of money

He assume that the possibilityof an econmy without money which is a theoratical possibility he notes the imporanceof stablity and predictability of demand for money and how due to structura changes and financal innovation in financial system this has shifted  Where transmission mode of money is computerised transaction and the deveopment in the information technology for the transmission of money.

he further says the further developments of the plastic cards which will shorly comes withis own built in computerised intellegence together wth the inceasing ablity to link homes, offices , and shops with sngle central computer to allow and facilitate electronic fund transfer .

We have progressed from barter system to a system from coin to a system in which money primarly took the form of specifc claims on financial intermediaries.