By Eric Tymoigne
The following answers a few question in order to illustrate the previous post and to develop certain points.
Q1: Can a commodity be a monetary instrument? Or, does money grow on trees?
Let us tackle the idea that “gold is money”. Clearly, a gold ingot is not a monetary instrument. There is no issuer, no denomination, no term to maturity or any other financial characteristics. A gold ingot is just a commodity, a real asset not a financial asset. On the other hand, gold coins have been monetary instruments and are still issued at times (Figure 1).