How Do We Define a Currency?

Joe Weisenthal (0:00)

Hello, Odd Lots listeners. I'm Joe Weisenthal.

Tracy Alloway (0:02)

And I'm Tracy Alloway.

Joe Weisenthal (0:03)

Tracy, we're doing another live show, and it's right here in New York City.

Tracy Alloway (0:07)

Yeah, this one should be our biggest yet. And we're going to have a bunch of Odd Lots favorites and do something maybe a little different to some of our previous live podcast recordings.

Joe Weisenthal (0:18)

When the guests are revealed, the show is going to sell out right away. So you should really just go get your ticket right now. It's June 26th. It's at Racket NYC. And you can find a ticket link at bloomberg.com/oddlots or bloombergevents.com/oddlotslivenyc.

Tracy Alloway (0:34)

We hope to see you there.

Iñaki Aldasoro (0:38)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:54)

Hello, and welcome to a special episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:59)

And I'm Joe Weisenthal.

Tracy Alloway (1:01)

Joe, this is special. I think this is the first time we've done this.

Joe Weisenthal (1:04)

We're not used to, like, you know, we like to talk to academics, certainly, but we've rarely ever done anything, like, in the proper academic setting, in the types of seminars where, you know, academics are on their home turf.

Tracy Alloway (1:18)

That's right. So we were invited by the Princeton Economic History Workshop to an event called How to Write the Biography of a Currency. I love that topic and that name. And we were invited to moderate a panel specifically on how to define a currency. How do we define what actually is money and what it does and all that good stuff? And we had an amazing panel.

Joe Weisenthal (1:43)

That's right. So we had three guests. We talked to Iñaki Aldasoro, an economist at the Bank for International Settlements, Rebecca Spang, a professor at the University of Indiana Bloomington, and Stefan Ingves, the former head of the Sveriges Riksbank, the Central Bank of Sweden, from 2006 to 2022 So take a listen to the three of them.

Iñaki Aldasoro (2:04)

So I'm Iñaki Aldasoro, and I'm a principal economist at the Bank for International Settlements.

Rebecca L. Spang (2:09)

Rebecca Spang, professor of history at Indiana University.

Stefan Ingves (2:13)

Stefan Ingves, former governor of the Swedish Central Bank, the Riksbank.

Tracy Alloway (2:18)

Should we go down the line? Should we start with Stefan?

Stefan Ingves (2:21)

How to write a biography of a currency, or actually maybe how to define a currency. And let me start by saying that it's a privilege to be here and discuss money or actually I think in the course of the day, money is used in the plural. It just so happens that 47 years ago, when I was a visiting graduate student here in Princeton, I took a course in monetary theory and I got hooked. And little did I back then know that with my Finnish background, I would end up leading the oldest central bank, the Riksbank, and also became one of its longest serving governors. So quite a journey. And with that as a background, what a privilege to be back.

As a practitioner, that's my background when I'm talking about money today, and what I have sort of experienced and concluded over the years. Let me start by saying that money is a social convention. Money is something about what we have in our heads. And this is also why we have moved over the centuries from seashells to something on a hard drive, or nowadays maybe in the cloud. And then that of course begs the question in terms of changing technologies, what is next. Today, money is an abstraction, but we still talk about money in terms of something that we can both see and touch. And it's remarkable that each and every time in my bank, when a new group of politicians were appointed to the General Council, they always wanted to see the gold, not talk about the money as such. It was always, can we get to see the gold? And that has something to do with this issue, that on the one hand, money is an abstraction, while on the other hand, we're sort of wired in our heads in such a way that we want to touch things. We can talk about money in many different ways, and we can talk about money at the micro level, and kind of the monetary plumbing, or we can talk about money at the macro level, and at the macro level, it's more sort of money tied to economic activity in one form or the other, and then it's actually economic activity in the aggregate. And you can also talk about money as something somewhere in between. Money as part of the financial plumbing. And that's kind of where I decided to say a few things today.