Monetary reform: new aggregates as a foundation in the digital age

The limited space of the "classic" aggregates M1, M2 and M3, which make up the money supply, is now replaced by an unlimited space, defined by new analysis tools, M5 and M6, based on the infinity of data and of their crossings made possible by digital technology. This is the new paradigm developed by Jean-François Serval and Jean-Pascal Tranié in an article published by the Revue Banque for the month of April 2023 (No. 879) which takes up the thesis developed in their latest book "Financial Innovations and Monetary Reform: how to get out of the debt trap" (Springer)*.

This new framework for analyzing the monetary space through knowledge of the data is an essential prerequisite for the implementation of a monetary reform that redefines a renovated regulatory system, explain the authors. This will pave the way for a proactive policy of controlling public deficits and reducing the debt. The cross-referencing of data, they point out, must make it possible to have a precise mapping of exchanges, but also to improve the rules favoring fluidity and security of monetary circulation, the regulation of which is the responsibility of the State.

*French publication : “Innovations financières et Réforme monétaire ou comment sortir du piège de la dette » (Lextenso)