Regensburg 2013 – scientific programme

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 6: Economic Models

SOE 6.3: Talk

Monday, March 11, 2013, 15:30–15:45, H37

How does money memorize social interactions? Understanding time-homogeneity in monetary systems. — •Andreas Schacker, Matthias Schmitt, and Dieter Braun — Systems Biophysics, LMU München

How does money shape and memorize our social interactions? There are many schools of thought on as to how monetary systems contribute to crises or boom/bust cycles. Statistical physics can provide a refreshing perspective to probe the stability of monetary systems [1,2,3]. We analyze how credit mechanisms introduce non-locality and time-heterogeneity to the monetary memory. Motivated by an analogy to particle physics, locality and time-homogeneity can be imposed to monetary systems. As a result, a full reserve banking system [4] is implemented by a two-currency system of non-bank assets (*money*) and bank assets (*antimoney*). Payment can either be made by passing on money or by receiving antimoney. As a result, a free floating exchange rate between non-bank assets and bank assets is established. Interestingly, credit creation is replaced in this monetary memory by a liquidity transfer that simultaneously transfers money and antimoney at a negotiated exchange rate. We analyze this novel monetary mechanism under random social interactions. Analytical results for all relevant distributions cen be provided, including an analysis of a fully transparent liquidity market. [1] European Physical Journal B 17, 723-729 (2000). [2] Reviews of Modern Physics 81, 1703 (2009). [3] Physica A 321, 605-618 (2003). [4] Ryan-Collins, Greenham, Werner, Jackson: Where Does Money Come From? positivemoney.org.uk.