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30 Stan. J.L. Econ. & Bus. 1 (2025)

handle is hein.journals/stabf30 and id is 1 raw text is: STANFORD JOURNAL OF LAW, ECONOMICS & BUSINESS VOL.30 No.1 MONEY: A FUNCTIONAL ANALYSIS STEVEN L. SCHWARCZ* ABSTRACT Most people currently think of money as government-issued paper certificates or coins that specify units of currency, such as dollars or euros. The advent of digital currencies, which appear abstract because of their intangibility, is therefore confounding almost everyone. This Article argues that money should also be viewed functionally-as a right that serves one or more of the generally accepted functions of money. The Article focuses on two of money's most generally accepted functions: to serve as a medium of exchange to facilitate the sale of goods and services, and to serve as a store of value. To perform these functions, money must be transferable, ideally with low transaction costs, and also must represent something of value. The implication of this functional analysis is twofold. First, this perspective can enable readers to understand, more intuitively, the changing nature of money and can help to de- mystify digital (that is, electronically evidenced) currencies. For example, the current differences between tangible and digital currencies relate principally to transferability, whereas the current differences among different forms of digital currencies relate principally to value. Second, viewing money functionally also can inform monetary regulation. In addition to the traditional goals of limiting third-party harm, monetary regulation should help to protect money's functions by correcting market failures that impair the low-cost transferability or the stable value ofwhatever rights are becoming widely used as money. This functional approach would expand the proper scope of financial regulation beyond its traditional negative role, protecting against harm, to also include the positive role of helping to promote beneficial business innovations. Stanley A. Star Distinguished Professor of Law & Business, Duke University School of Law; Senior Fellow, the Centre for International Governance Innovation (CIGI); Founding Director, Duke Global Financial Markets Center. The author thanks Regis Bismuth, Sir William Blair, Ross Buckley, Iris H-U Chiu, David Geen, Katja Langenbucher, and participants in a Graduate-Faculty Seminar at Sciences Po School of Law, a University College London Centre for Ethics and Law Distinguished Lecture, an ACLE Seminar at the University of Amsterdam Law School, a Distinguished Public Lecture at the University of Budapest (ELTE) Faculty of Law, a keynote speech at the University of Tilburg Law School, and a lecture at the University of Paris-Pantheon-Assas for valuable comments and Christina Trepczynski for invaluable research assistance. The author also thanks Sciences Po School of Law, Paris, for graciously appointing him as Senior Visiting Fellow during his Duke Law School sabbatical, enabling (among other things) the writing of this Article. STANFORD JOURNAL OF LAW, ECONOMICS & BUSINESS VOL. 30 No. 1

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