Is the monetary system decentralized?


Although the economic market is rather decentralized, the monetary system is rather centralized. The currencies are at a forced price, that is to say, that since the end of the gold standard we can no longer exchange our currency against gold, moreover, in general, there is only one currency at legal tender so the economic agents do not have much choice. In contrast, bitcoin is a decentralized currency, the power belongs to all users, and there is no central bank.

Economists justify decentralization because it gives rise to a more economical and efficient redistribution: decisions relating to public expenditure, taken at an administrative level more sensitive to the needs of the citizens and closer to them, are more likely to reflect the demand for local services, as decisions taken by a distant central government. The second benefit of decentralization is that people are more willing to pay for services they believe meet their priorities, especially if they have participated in the decision-making regarding the provision of those services. One of the justifications for decentralization is that it improves the competitiveness of governments and increases innovation, and hence the likelihood that they will act in a way that meets the aspirations of citizens.

A number of problems, both theoretical and practical, complicate the question of whether decentralization is a good or a bad economic strategy. At the macroeconomic level, there is concern that decentralization will make it difficult to implement stabilization policies and effectively push public spending and debt to destabilizing levels. Another view on this point, however, is that decentralized economy systems can be designed in such a way as to avoid destabilizing effects and provide good incentives. Part of the decentralization of the 1980s, for example, actually consisted of offloading financial imbalances from central governments to lower levels. Under these circumstances, it is not surprising that there is a strong link between decentralization and financial imbalances at lower levels of government. Does decentralization slow down economic growth? Opinions remain divided on this.

Equity issues – between communities and between people – are at the center of discussions on decentralization. Some local governments are better resourced than others, perhaps because of their size or location. In addition, historical circumstances may have created local inequalities. Thus, an interagency transfer program can be designed to allocate resources to disadvantaged areas to ensure that all citizens enjoy a minimum of service, wherever they live, or, alternatively, receive increased assistance to reduce disparities.

Generally, it is believed that ultimately central governments have the responsibility of ensuring people-to-people equity, but local governments also play very important roles in executing central level redistribution programs and determining a whole range of taxes, expenditure, and transfer systems between communities. Where local economies are inherently open and many resources, especially key human resources, are mobile, only limited success is expected from redistribution programs targeting communities. From an economic point of view, it is the market that is the ultimate form of decentralization in the sense that the consumer can acquire a tailor-made product by his choice of suppliers. But the nature of most local utilities limits this option for the consumer. 

Successful decentralization is closely linked to observing the principles of developing: cryptocurrency bank, finances, following a clear allocation of functions; informed decision making; adherence to local priorities; and accountability. However, putting these principles into practice is not easy. Country circumstances differ, often in complex ways, therefore the policy and institutional instruments that establish decentralization must be shaped taking into account the specific conditions of the country concerned.

The instruments of decentralization Emocoin – the legal and institutional framework, the accountability structure for service delivery, and the interagency finance regime are designed to support policy objectives. Achieving these goals (or at least making local governments perform better than central government) is a big but doable task.

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