Summary:

Hans-Joachim Stadermann discusses David Ricardo's proposals of 1816 for an "economical and secure currency" based on gold vis-à-vis the refinancing of central-bank notes based on collateralised property titles. The gold currency's success in Britain, he argues, was neither due to the natural quality nor the inherent labour value of the gold bullion. It was rather the fact that gold was a secure asset, a property title, whose price was fixed by the Bank of England through its connection to the pound sterling. Nowadays, central banks can overcome the costly procedure of mining and minting by refinancing well-defined eligible assets, which can be collateralised as easily as gold and whose prices can be effortlessly stabilised by the central bank?s repurchase transactions. Therefore, central-bank money as a derivative of assets is always creditor's money, and not something that must be derived from a valuable commodity or created ex nihilo and then rendered valuable by the rate of interest.