The current discussion about the future of the financial system draws heavily on a set of theories known as the ‘New Monetary Economics’. The New Monetary Economics predicts that deregulation and financial innovation will lead to a moneyless world. This paper uses a market microstructure...

Whether a theoretical system is realistic or not has been a concern in economics, particularly in monetary theory, over the past century. Following John R. Hicks' proposal that a realistic monetary theory could be constructed along an evolutionary path, starting with the workings of a real...