This article explores some implications of adaptive learning for monetary evolution using a search--theoretic framework that allows for media--of--exchange network effects. Adaptive learning precludes any voluntary transition to a fiat standard from a non--monetary state of nature and can...

It is generally believed that Congress, in imposing a prohibitive 10% tax on state banknotes in 1865, made the public better off by doing away with inferior brands of currency while simultaneously helping finance the Civil War by stimulating bond sales to national banks. In truth, the tax served...

By contrast to private banks, public monetary authorities – central banks and currency boards – have limited credibility in making redemption or fixed-exchange-rate commitments. Their sovereign immunity obviates legal penalties for devaluing, and their monopoly status weakens reputational...