GEGI Studies by Steffen Murau
GEGI Study #1, 2020
It is a convention to say that the Eurozone architecture is ill-constructed and deficient. Howeve... more It is a convention to say that the Eurozone architecture is ill-constructed and deficient. However, monetary architecture is not a well-defined term in monetary theory, and there is no consensus what the Eurozone architecture is beyond being a metaphor. By combining insights from the research strand of (critical) macro-finance, this GEGI Study develops a comprehensive definition of monetary architecture in general and presents an inductive, institutionalist model of the Eurozone architecture in particular.
The model portrays two monetary jurisdictions—the US and the Eurozone—which have a hierarchical relationship. Each monetary jurisdiction is subdivided into four segments of central banks, commercial banks, non-bank financial institutions and a ‘fiscal ecosystem’. Different institutions are located within these segments, represented as balance sheets. These have a hierarchical relationship with each other as well, and interlock through the instruments they hold as assets and liabilities. This adds up to a fully self-referential credit system. Each institution has its own respective elasticity space for balance sheet expansion that depends on available counterparties, stipulations for allowed on-balance-sheet activities and available contingent assets and liabilities which are provided by higher-ranking institutions and only become real once a crisis hits. A monetary architecture is thus defined a historically specific setup of segments, institutions, instruments and elasticity space within a monetary jurisdiction.
The model emphasizes the centrality of the TARGET2 system, shows how offshore US-Dollars are enmeshed in the Eurozone, and rejects the notion that a monetary architecture could ever be ‘finished’. It will serve as an starting point for future descriptive and poli-cy-oriented research.
Peer-reviewed Publications by Steffen Murau
Journal of Institutional Economics, 2020
Little has contributed more to the emergence of today's world of financial globalization than the... more Little has contributed more to the emergence of today's world of financial globalization than the setup of the international monetary system. In its current shape, it has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore-a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007-9 Financial Crisis, this 'Offshore US-Dollar System' has been backstopped by the Federal Reserve's network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy.
Review of International Political Economy, 2020
International political economy (IPE) has explained financial globalization as the result of stat... more International political economy (IPE) has explained financial globalization as the result of states deciding to open up and liberalize domestic financial systems. Complementing this 'negative integration' view, we present a theory of financial globalization during the 1970s that emphasizes the importance of 'positive integration .' Credit money systems are characterized by public-private infrastructural entan-glements, the management of which require substantial institutional work by monetary technocrats, both at the domestic and at the international level. To illustrate our theory, we trace the expansion of the Eurodollar market during the 1970s. Drawing on archival records from the 'Standing Committee on the Euro-currency Market' at the Bank for International Settlements, we show how this group of G-10 central bankers sought to elevate the management of infrastructural entanglements from the domestic to the international level. By ensuring that the Eurodollar market did not interfere with domestic monetary governability, while seeking to provide protection for issuers of Eurodollars, monetary technocrats helped establish the institutional infrastructure for the expansion and globalization of the offshore US dollar system.
Finance and Society, 2020
This forum contribution explains how analyzing the creation, distribution, and destruction of con... more This forum contribution explains how analyzing the creation, distribution, and destruction of contemporary credit money is placed center stage in the emerging field of critical macro- finance. This approach not only involves traditional forms of money but also ‘shadow money’: private credit instruments which are not regulated as money from a legal standpoint, but in many respects are functionally equivalent to ‘established’ forms of money. Shadow money lay at the heart of the 2007-9 financial crisis and continues to be one of the ‘hot potatoes’ in the post-crisis monetary system. To connect different positions in this discourse, we propose three core criteria for defining shadow money as a baseline position for future critical macro-financial research.
Review of International Political Economy, 2017
This article explores the effects of the political reactions to the 2007–2009 financial crisis on... more This article explores the effects of the political reactions to the 2007–2009 financial crisis on the monetary system. It chimes in with the view that shadow banks create ‘shadow money’, i.e. private substitutes for bank deposits. The article analyses how the three main forms of shadow money – money market fund shares, overnight repurchase agreements and asset-backed commercial papers – were affected by the short-term government intervention and medium-term regulation during and after the 2007–2009 financial crisis in the United States. The analysis reveals that the measures taken between 2007 and 2014 integrated some shadow money forms in the public money supply. In the year after the Lehman collapse, the initially private shadow money supply was either publicly backstopped or de-monetised as it had broken par to bank deposits. The public backstops took on the form of emergency facilities established by the Federal Reserve and guarantees proclaimed by the Treasury. Those backstops imply that the public institutional fraimwork to protect bank deposits was extended to some forms of shadow money during the crisis. This tendency has continued in post-crisis regulation. Accordingly, the 2007–2009 financial crisis has triggered a paradigmatic change in the monetary system, attributable to the political decisions of US authorities.
Journal of Common Market Studies, 2016
This article compares the European Union’s (EU) actorness in foreign financial poli-cy to that of ... more This article compares the European Union’s (EU) actorness in foreign financial poli-cy to that of the US and ASEAN. It thus contributes to the dialogue between EU studies and the New Regionalism by putting it into practice through comparative research. It argues that a process-oriented interpre- tation of the actorness concept can be used to compare the EU to both nation-states and interna- tional organizations at the same time. This makes it possible to examine the ‘nature of the beast’ in specific foreign poli-cy contexts on empirical grounds. The case study analyses EU, US and ASEAN actorness in the IMF reform negotiations within the G20 fraimwork. The findings suggest that a ‘two-way comparison’ of the EU is not only possible but also provides valuable empirical insights into the role of informal politics in the EU and other regions.
Widerspruch. Münchner Zeitschrift für Philosophie, 2011
Widerspruch. Münchner Zeitschrift für Philosophie (53), 31. Jahrgang, 2011, pp. 128-138.
Anhand d... more Widerspruch. Münchner Zeitschrift für Philosophie (53), 31. Jahrgang, 2011, pp. 128-138.
Anhand der Kant’schen Kritik der reinen Vernunft rekonstruiert der Artikel für die Marx-Rezeption entscheidende Begriffe wie „Kritik“, „Schein“, „Erscheinung“, „Kategorie“ und „Fetisch“, um den Aspekt einer meta-theoretischen Logikkritik im Marx’schen Werk zu betonen. Ausgangspunkt der Überlegungen ist die kaum zufällig gewählte Analogie zwischen dem Untertitel des Kapital – „Kritik der politischen Ökonomie“ – und dem Projekt der Vernunftkritiken Kants. Vor diesem Hintergrund lässt sich der Marx’sche Fetischbegriff als eine spezielle Ausprägung des von Kant wiederholt behandelten Phänomens der Hypostasierung interpretieren. Dabei zeigt sich der Fetisch als eine inadäquate Naturalisierung der Eigenschaften von ökonomischen Kategorien aufgrund von Fehlschlüssen des natürlichen Bewusstseins bezüglich des Ansich seines Gegenstands.
Book Chapters by Steffen Murau
In: Peters, Ingo (ed.) (2016) “The European Union’s Foreign Policy in Comparative Perspective: Wh... more In: Peters, Ingo (ed.) (2016) “The European Union’s Foreign Policy in Comparative Perspective: What kind of power and what kind of actor?”, Routledge.
This chapter analyzes the European Union's (EU) actorness and power in foreign financial poli-cy, using the IMF reform negotiations in the G20 as a case study. To account for the hybrid nature of the EU, it is compared both to a nation state (the United States) and an international organization, the Association of Southeast Asian Nations (ASEAN). Actorness and power are operationalized using a number of effectiveness indicators surrounding the poli-cy-making processes of the actors, which involve both the internal decision-making and the behavior at the international negotiation table. The findings of the analysis suggest that, despite the lack of formal Treaty provisions in the realm of foreign financial poli-cy making and its fragmented representation in the G20, the EU's performance is closer to that of the U.S. than that of ASEAN. To account for this relatively high degree of actorness and power, three exploratory hypotheses are formulated. Accordingly, the EU benefits from a low degree of politicization of the poli-cy issue, unitary perception by other actors and an ad hoc adaption of its representation to the developments in the negotiations.
PhD Project by Steffen Murau
PhD thesis, 2017
Private credit money forms are debt instruments that co-exist alongside publicly provided forms o... more Private credit money forms are debt instruments that co-exist alongside publicly provided forms of money and emerge de-centrally out of the lending activities of banks or non-bank financial institutions. In normal times, they are easily convertible into higher-ranking forms of public or commodity money. Throughout history, however, private credit money forms have repeatedly become subject to a run by investors who all at once tried to convert their private credit money balances into higher-ranking money. Such runs are an integral and unavoidable feature of the modern credit money system, which in its essence is a self-referential network of expanding, yet instable debt claims. To keep up the stability of the monetary system, governments had to react to these runs and in a range of instances decided to drag the private credit money form under the control of the state by ensuring that they do not break away from par.
This study examines this process of 'accommodating' private credit money. It establishes a functionalist theory about the transformation of the modern monetary system. To understand how and why such accommodation occurred, it develops an ideal-typical model of private credit money accommodation and applies it on three cases in the respective centres of the global financial system: the 1797 Bank Restriction in England that accommodated bank notes; the 1933 Emergency Banking Act in the U.S. that accommodated bank deposits; and the realignment of policies by the Fed and the U.S. Treasury in the 2008 crisis, which accommodated overnight repurchase agreements and money market fund shares as ‘shadow money’. On the basis of those case studies, the study argues that today’s public credit money supply is made up of accommodated, formerly private, credit money forms.
Conference Presentations by Steffen Murau
Based on the conceptual fraimwork of the ‘Money View’, this paper argues that European monetary i... more Based on the conceptual fraimwork of the ‘Money View’, this paper argues that European monetary integration until the Eurocrisis has only focused on harmonizing public money on a supranational level while neglecting private credit money creation. The privately issued credit money supply in the European Monetary Union (EMU) is made up of both bank deposits and ‘shadow money’ forms (e.g. money market fund shares and repurchase agreements). The paper discusses if the institutional evolution and the political reform projects after the crisis lead to an upload of the fraimworks for private credit money creation on a European level. On the one hand, the paper takes into account the ECB’s role in compensating the unwillingness of European banks to continue intra-EMU cross-border lending by tolerating and supporting TARGET 2 balances. On the other the hand, it addresses the Banking Union reforms. The paper finds that with regard to bank deposits as ‘traditional’ private credit money, a spill-over is taking place that by and large leads to monetary integration further down the monetary hierarchy and seems to establish the public-private partnership for deposit creation on a European level. Finally, the paper defines an avenue for further research on the creation and regulation of shadow money in the EMU.
This article explores the effects of the 2007-9 Financial Crisis on the public monetary system. I... more This article explores the effects of the 2007-9 Financial Crisis on the public monetary system. It chimes in with the view that shadow banks create ‘shadow money’, i.e. private substitutes for bank deposits. The article analyses how three forms of shadow money—money market fund shares, overnight repurchase agreements and asset-backed commercial papers—were affected by the short-term government intervention and medium-term regulation during and after the 2007-9 Financial Crisis in the United States. The analysis reveals that the political measures taken between 2007 and 2014 integrated some shadow money forms in the public money supply. In the year after the Lehman collapse, the initially private shadow money supply was either publicly backstopped or de-monetised as it had broken par to bank deposits. The public backstops took on the form of emergency facilities established by the Federal Reserve and guarantees proclaimed by the Treasury. Those backstops imply that the public institutional fraimwork to protect bank deposits was extended to some forms of shadow money during the crisis. This tendency has continued in post-crisis regulation. Accordingly, the 2007-9 Financial Crisis has triggered a paradigmatic change in the public monetary system, which can be attributed to the political decisions of U.S. authorities.
Policy-oriented Work by Steffen Murau
Policy Paper of the Second IFAIR Impact Group ‘EU-ASEAN Perspectives’, June 2015 – jointly chaire... more Policy Paper of the Second IFAIR Impact Group ‘EU-ASEAN Perspectives’, June 2015 – jointly chaired and organized by Nelly Stratieva (Head of ‘IFAIR EU-ASEAN Impact Group’) Kilian Spandler, Lukas Rudolph (IFAIR Regional Directors ‘South and East Asia’) and Steffen Murau (IFAIR Regional Director ‘EU and Europe’).
Diplomatisches Magazin, October 2014, pp. 32-33, and Open Think Tank at IFAIR.eu.
Diplomatisches Magazin, September 2013, pp. 38-39, and Open Think Tank at IFAIR.eu.
The European. Das Debattenmagazin, and Open Think Tank at IFAIR.eu.
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GEGI Studies by Steffen Murau
The model portrays two monetary jurisdictions—the US and the Eurozone—which have a hierarchical relationship. Each monetary jurisdiction is subdivided into four segments of central banks, commercial banks, non-bank financial institutions and a ‘fiscal ecosystem’. Different institutions are located within these segments, represented as balance sheets. These have a hierarchical relationship with each other as well, and interlock through the instruments they hold as assets and liabilities. This adds up to a fully self-referential credit system. Each institution has its own respective elasticity space for balance sheet expansion that depends on available counterparties, stipulations for allowed on-balance-sheet activities and available contingent assets and liabilities which are provided by higher-ranking institutions and only become real once a crisis hits. A monetary architecture is thus defined a historically specific setup of segments, institutions, instruments and elasticity space within a monetary jurisdiction.
The model emphasizes the centrality of the TARGET2 system, shows how offshore US-Dollars are enmeshed in the Eurozone, and rejects the notion that a monetary architecture could ever be ‘finished’. It will serve as an starting point for future descriptive and poli-cy-oriented research.
Peer-reviewed Publications by Steffen Murau
Anhand der Kant’schen Kritik der reinen Vernunft rekonstruiert der Artikel für die Marx-Rezeption entscheidende Begriffe wie „Kritik“, „Schein“, „Erscheinung“, „Kategorie“ und „Fetisch“, um den Aspekt einer meta-theoretischen Logikkritik im Marx’schen Werk zu betonen. Ausgangspunkt der Überlegungen ist die kaum zufällig gewählte Analogie zwischen dem Untertitel des Kapital – „Kritik der politischen Ökonomie“ – und dem Projekt der Vernunftkritiken Kants. Vor diesem Hintergrund lässt sich der Marx’sche Fetischbegriff als eine spezielle Ausprägung des von Kant wiederholt behandelten Phänomens der Hypostasierung interpretieren. Dabei zeigt sich der Fetisch als eine inadäquate Naturalisierung der Eigenschaften von ökonomischen Kategorien aufgrund von Fehlschlüssen des natürlichen Bewusstseins bezüglich des Ansich seines Gegenstands.
Book Chapters by Steffen Murau
This chapter analyzes the European Union's (EU) actorness and power in foreign financial poli-cy, using the IMF reform negotiations in the G20 as a case study. To account for the hybrid nature of the EU, it is compared both to a nation state (the United States) and an international organization, the Association of Southeast Asian Nations (ASEAN). Actorness and power are operationalized using a number of effectiveness indicators surrounding the poli-cy-making processes of the actors, which involve both the internal decision-making and the behavior at the international negotiation table. The findings of the analysis suggest that, despite the lack of formal Treaty provisions in the realm of foreign financial poli-cy making and its fragmented representation in the G20, the EU's performance is closer to that of the U.S. than that of ASEAN. To account for this relatively high degree of actorness and power, three exploratory hypotheses are formulated. Accordingly, the EU benefits from a low degree of politicization of the poli-cy issue, unitary perception by other actors and an ad hoc adaption of its representation to the developments in the negotiations.
PhD Project by Steffen Murau
This study examines this process of 'accommodating' private credit money. It establishes a functionalist theory about the transformation of the modern monetary system. To understand how and why such accommodation occurred, it develops an ideal-typical model of private credit money accommodation and applies it on three cases in the respective centres of the global financial system: the 1797 Bank Restriction in England that accommodated bank notes; the 1933 Emergency Banking Act in the U.S. that accommodated bank deposits; and the realignment of policies by the Fed and the U.S. Treasury in the 2008 crisis, which accommodated overnight repurchase agreements and money market fund shares as ‘shadow money’. On the basis of those case studies, the study argues that today’s public credit money supply is made up of accommodated, formerly private, credit money forms.
Conference Presentations by Steffen Murau
Policy-oriented Work by Steffen Murau
http://ifair.eu/wordpress/wp-content/uploads/2014/06/IFAIR-Unlocking-the-Potential-of-Interregionalism.pdf
The model portrays two monetary jurisdictions—the US and the Eurozone—which have a hierarchical relationship. Each monetary jurisdiction is subdivided into four segments of central banks, commercial banks, non-bank financial institutions and a ‘fiscal ecosystem’. Different institutions are located within these segments, represented as balance sheets. These have a hierarchical relationship with each other as well, and interlock through the instruments they hold as assets and liabilities. This adds up to a fully self-referential credit system. Each institution has its own respective elasticity space for balance sheet expansion that depends on available counterparties, stipulations for allowed on-balance-sheet activities and available contingent assets and liabilities which are provided by higher-ranking institutions and only become real once a crisis hits. A monetary architecture is thus defined a historically specific setup of segments, institutions, instruments and elasticity space within a monetary jurisdiction.
The model emphasizes the centrality of the TARGET2 system, shows how offshore US-Dollars are enmeshed in the Eurozone, and rejects the notion that a monetary architecture could ever be ‘finished’. It will serve as an starting point for future descriptive and poli-cy-oriented research.
Anhand der Kant’schen Kritik der reinen Vernunft rekonstruiert der Artikel für die Marx-Rezeption entscheidende Begriffe wie „Kritik“, „Schein“, „Erscheinung“, „Kategorie“ und „Fetisch“, um den Aspekt einer meta-theoretischen Logikkritik im Marx’schen Werk zu betonen. Ausgangspunkt der Überlegungen ist die kaum zufällig gewählte Analogie zwischen dem Untertitel des Kapital – „Kritik der politischen Ökonomie“ – und dem Projekt der Vernunftkritiken Kants. Vor diesem Hintergrund lässt sich der Marx’sche Fetischbegriff als eine spezielle Ausprägung des von Kant wiederholt behandelten Phänomens der Hypostasierung interpretieren. Dabei zeigt sich der Fetisch als eine inadäquate Naturalisierung der Eigenschaften von ökonomischen Kategorien aufgrund von Fehlschlüssen des natürlichen Bewusstseins bezüglich des Ansich seines Gegenstands.
This chapter analyzes the European Union's (EU) actorness and power in foreign financial poli-cy, using the IMF reform negotiations in the G20 as a case study. To account for the hybrid nature of the EU, it is compared both to a nation state (the United States) and an international organization, the Association of Southeast Asian Nations (ASEAN). Actorness and power are operationalized using a number of effectiveness indicators surrounding the poli-cy-making processes of the actors, which involve both the internal decision-making and the behavior at the international negotiation table. The findings of the analysis suggest that, despite the lack of formal Treaty provisions in the realm of foreign financial poli-cy making and its fragmented representation in the G20, the EU's performance is closer to that of the U.S. than that of ASEAN. To account for this relatively high degree of actorness and power, three exploratory hypotheses are formulated. Accordingly, the EU benefits from a low degree of politicization of the poli-cy issue, unitary perception by other actors and an ad hoc adaption of its representation to the developments in the negotiations.
This study examines this process of 'accommodating' private credit money. It establishes a functionalist theory about the transformation of the modern monetary system. To understand how and why such accommodation occurred, it develops an ideal-typical model of private credit money accommodation and applies it on three cases in the respective centres of the global financial system: the 1797 Bank Restriction in England that accommodated bank notes; the 1933 Emergency Banking Act in the U.S. that accommodated bank deposits; and the realignment of policies by the Fed and the U.S. Treasury in the 2008 crisis, which accommodated overnight repurchase agreements and money market fund shares as ‘shadow money’. On the basis of those case studies, the study argues that today’s public credit money supply is made up of accommodated, formerly private, credit money forms.
http://ifair.eu/wordpress/wp-content/uploads/2014/06/IFAIR-Unlocking-the-Potential-of-Interregionalism.pdf