Fiduciary media

From Mises Wiki, the global repository of classical-liberal thought
Jump to: navigation, search

Fiduciary media consist of the proportion of perfect money substitutes which a bank issues but does not fully back by physical monetary units (i.e. gold or paper money) in their vaults. [1] Fiduciary media can exist in many forms including credit notes, checks or drafts.[2] When a bank increases the amount of fiduciary media in an economy, ceteris paribus, the purchasing power of money will decline.[3]