Two events in the last fifteen years have fundamentally altered the way the financial system operates—and neither was planned by global policymakers.

The great crash of 2008 stopped banks from extending loans to counterparties without taking any security in return. Henceforth, large credits would require collateral to be posted by the borrower.

And cryptocurrencies have spawned a new form of digital money—the stablecoin—that threatens to torpedo central banks’ control of the monetary system.

One person who has kept a close eye on the role of collateral and stablecoins is Manmohan Singh, a senior economist at the IMF and guest on the latest episode of the New Money Review podcast.

Singh, whose specialist area is the plumbing that underlies our money markets, says getting the design of the system right is crucial to ensure adequate lending and continuing economic growth.



And the stakes are getting higher as central banks unravel their quantitative easing programmes, while the digital money revolution picks up pace.

Listen to the New Money Review podcast for more on:

• How digital money is changing the role of central banks
• Why stablecoins pose a real challenge for policymakers
• Why the instantaneous settlement of digital money opens a can of worms
• The intraday float of the banking sector and the fungibility of money
• Should fintech money be kept separate from bank money?
• Should fintechs have direct access to central bank wholesale payment systems?
• Bank money and stablecoins—which provides better economics?
• Should stablecoins pay interest?
• Working out the net effect of quantitative tightening (QT)
• Why QT will be offset by the release of collateral
• Why collateral moves around the system more slowly than pre-2008