Open date: 8/3/209

Research Hub Question: Is the Financial System Fit for Purpose?

Research Hub Leaders: Dr Ekaterina Svetlova

Application Deadline: 23.59 on 2 April 2019

Submit Application to: Richard Arnold (


This is a directed call, meaning that it follows from some of the unanticipated ideas which emerged from the general Finance Hub Research Call at the end of last year. We therefore have a specific area of interest and this call involves a single stage application process. The overarching themes are around “financial technology”, “incorporating banks as money creators”, and “Banking without fixed collateral.”

Criteria for Research Funding

The Finance Hub of Rebuilding Macroeconomics is looking to fund pilot research projects that address the over-arching question ‘What is money today?’ In a workshop held in January 2019, we discussed money creation and digital currencies and the impact on central banking regulation. A background note, summary and presentations from the workshop are all available here.

A number of themes emerged from the discussion at the workshop which we would like to develop further through research projects. These include:

  • Macroeconomic models do not usually take into account that it is the banking system which creates money. If there is a banking system included in macroeconomic models, it is usually assumed to play an intermediation role rather than determining money creation. The value of modern banking is based on trust, rather than on precious metal backing. We welcome research which addresses the issue of how to bring a realistic account of money creation into macroeconomics.
  • Money is changing rapidly as new forms of payment such as Apple Pay, Facebook money and cryptocurrencies are emerging. Perhaps institutions other than the state will define money in the future. Research into the economic and legal notions of money is required with collaborations between economists, lawyers, economic geographers and sociologists. What are the consequences of new borders and cyber-territories for policy-makers?
  • Traditional lending is often backed by physical fixed assets for collateral. But the valuable capital in today’s largely services oriented firms is often of a non-pledgeable capital such as intangible assets and human capital. What does this means for how firms will be financed in the future and does this argue for a more or less centralised financial system?

We look forward to receiving your applications.

08 March 2019