The 16th AIIFL Distinguished Public Lecture

Law’s Great Embarrassment
The Idea of Money Before and After the 4th Industrial Revolution

Professor Emilios Avgouleas
Chair in International Banking Law and Finance, University of Edinburgh
Visiting Research Professor, Faculty of Law, University of Hong Kong

Tuesday, 21 May 2019, 12:30 – 1:30 pm
Academic Conference Room, 11/F Cheng Yu Tung Tower, University of Hong Kong

From Aristotle’s Ethics-Nicomachea to Malinowski’s Kula ring and from there all the way to the Renaissance Medicis, our modern central banks, and the mysterious Satoshi Nakamoto the idea of money has been about: (a) monetising the natural world in the form of metal coins or even artefacts, or alternatively value pegged on it (the Gold Standard), and since 2008 the virtual world including bytes, (b) the concepts of exchange, liquidity, and extinction of obligations via payment of “value”, and (c) notions of a sovereign backstop (even after the abolition of the Gold Standard) and of intermediation (fractional reserve lending). Yet Law has always felt a certain unease in finding a way to cope with all these aspects of the idea of money. In particular legal systems have found it impossible to deal with the matter of intermediated money looking instead for techniques that can augment its resilience by mingling it into enforceable legal obligations (credit contracts), which also adds an inter-temporal (maturity) dimension, or premising it to the compulsory powers of the state by calling fiat money: legal tender, and digital representations of legal tender: digital currencies or digital cash. Notably, though, fiat money is not backstopped in any binding form. It is, thus, no wonder that the emergence of dis-intermediated means of exchange like cryptocurrencies have placed a strain on most legal systems including those of the UK and of the USA, with the latter treating the new means of exchange as securities or commodities (with the aid of legal sophistries). This lecture traces the evolution of legal and economic notions of money in modern times, considers the challenge posed by cryptocurrencies on older approaches, and concludes with a more pluralistic definition of money. The new definition focuses mostly on the properties of money as a form of liquidity to facilitate market exchange and the matter of intermediation (including collective/collaborative intermediation) giving those characteristics precedence over legal compulsion and backstops.

Professor Emilios Avgouleas holds the International Banking Law and Finance Chair at the University of Edinburgh and is a Member of the Stakeholder Group of the European Banking Authority (EBA) elected in the so-called ‘top-ranking’ academics section. Emilios has held a number of visiting posts in leading institutions in Europe and the USA and he is currently honoured to be a Visiting Research Professor at HKU Faculty of Law and a Visiting Professor at the Department of European Political Economy, LUISS, Rome. Emilios is a leading international expert on public policy and financial reform, bank and capital markets regulation, and global economic governance and he has published extensively in the wider field of finance law and economics, banking theory and regulatory policy, systemic risk, Fintech policy, and behavioural finance. His publications include: Cranston, Avgouleas et al. Principles of Banking Law (OUP, 3rd ed., 2018), Governance of Global Financial Markets (CUP, 2012) and The Mechanics and Regulation of Market Abuse (OUP, 2005). He has co-authored and co-edited a number of research volumes the latest of which is Avgouleas, Donald (eds), The Political Economy of Financial Regulation (CUP, 2019) and the Special Issue of the EBOR (20/2019) on Law, Finance and Technology.