ABSTRACT
The purpose of the financial system is to provide credit, that is, to ensure the circulation of money in the economic system. While the term credit may be regarded as a technical term, the word money is better aligned with everyday practices and a common-sense outlook, but still the concept of money is fairly complex. In exchange for underwriting financial and monetary stability, states demanded control over money creation through regulation and monetary policy. Yet as this systemic insurance comes at a cost, private actors continually seek to circumvent the state’s balance sheet and create pledges that credibly pledge moneyness. Of particular interest in this setting are the financial innovations that have served to actively circumvent and undermine the regulatory efforts that have been made by political entities such as the US Congress after the most recent finance industry crisis.
