Assignment;
Overview
The FM/PIM stands for "failed money / privately-issued money". In this project you form a group that studies and reports on either a failed currency (for example, the Zimbabwean Dollar or the German Papiermark) or a privately-issued money (which may include possible future forms of money such as Bitcoin or Etherium). The report can also be on both: a failed, privately-issuedmoney. The report itself is relatively short, just over 1000words, so make sure it builds on a solid analysis and is written well.
This assignment is done in groups of normally three people [email me by asap if you would like to request to work with more or fewer group members (clarifying why). I like multiple students in groups as you will all learn from each other!]. Group members will get the same grade. You are responsible for finding a group and making arrangements regarding a fair working division with your group members. If you want, I can match you with other students if need be. If you would like to make use of this offer, please email me this week, i.e. by March 1st at the latest. If I don't hear back from you by March 1, then I will assume you have found a group of three members and I will learn about who are the exact members by the time you submit the assignment (no need to confirm at this monent who is in your group)
Somewhat more detailed instructions
The project is fairly open actually, but the report should be as brief as possible on the necessary background information,and as lengthy as possible on presenting a "strong analysis". What constitutes a strong analysis? This is always the big question. Yet... find some thoughts on this very matter next.
For example, in case of a failed currency project, answer convincingly: "In what sense did the currency fail" and "Why exactly did it fail?" [e.g. what agency issued the currency? (A central bank?), was the central bank independent? Was there any government interference and how did it play out, what were the mechanics behind the failure? Any serious counterfeiting issues? Any competing monies?]
In case of a current or future privately-issued money, answer convincingly: "How well does it perform the Functions of Money listed in, "What are the indicators of its current success or failure?", "Can you convincingly gauge what is the likelihood of its ultimate success?", etc. The question of the likelihood of success is not easy, but we have learned it is relevant to learn about the opportunities and incentives of the issuer to "flood the market" at some stage, the possibility to counterfeit or "crack" the currency. Also, will regulators at some stage regulate against this possible form of money? Why? Finally, have a look at the concept of "network externalities" (industrial organization literature). How do possible network externalities play out for the money of your choice?
In all likelihood the brainstorming I did above will have missed out on some relevant questions. Ultimately, your group members will ask and answer the relevant questions. In doing so, draw on sources including relevant Econ 305 material. [Again, the "Functions of Money", the "Money Supply Process", and the incentives and independence of the issuer if the money is a currency, if the issuer is a Central Bank) come to mind.]