It's the key to free market capitalism, she said, with money the
unit of account that provides clarity on pricing.
The similarity is in the fact that crypto currencies can be used as a medium of exchange, a
unit of account and a store of value.Using a crypto currency such as bitcoin, one can buy goods (medium of exchange), at a given price (
unit of account), using funds from their crypto wallets (store of value).
Viable monies provide a reliable means of payment,
unit of account, and store of value.
These digital currencies fare poorly on all three measures critical for the wider acceptance of any currency--be it a medium of exchange, a store of value or a
unit of account.
President Nicolas Maduro ordered banks to adopt the petro cryptocurrency as a
unit of account. The move comes as the nation is struggling under a political and economic crisis.
The starting point for the policy I am advocating is to encourage economic actors to use the electronic dollar--or euro, yen, pound, peso, etc.--as the
unit of account, and as the unit in which prices are expressed.
Money is supposed to serve three purposes: it functions as a medium of exchange, a
unit of account, and a store of value.
* Matthias Doepke, Northwestern University and NBER, and Martin Schneider, Stanford University and NBER, "On the Optimality of a Dominant
Unit of Account"
To ensure a determinate price level, the government has only to provide a
unit of account and require that prices are quoted in terms of it.
The idea of an inflation-proof
unit of account is not itself a novel idea - the grand old man of English economics, Alfred Marshall, suggested it more than a century ago, and in Chile it actually exists.
Economists remind us that money serves three functions: a store of value, a
unit of account and a transaction mechanism.