Money or Money Substitutes: Implications of Selgin’s Small Change Challenge

Selgin (2009) questions the practicality of 100 percent reserve requirements applied to small change. He interprets the private coinage of small change in 18th century England as embodying fiduciary media and concludes that requiring 100 percent reserves would have led to very high costs. This paper provides an alternative interpretation of the private coinage episode in England as embodying money itself, not fiduciary media, and uses historical details in Selgin (2008) as support of that interpretation. This leads to a discussion of the Misesian typology of money and his distinction between money and money substitutes.

Find article at The Quarterly Journal of Austrian Economics.