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Just Financial Markets?Finance in a Just Society$
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Lisa Herzog

Print publication date: 2017

Print ISBN-13: 9780198755661

Published to Oxford Scholarship Online: May 2017

DOI: 10.1093/oso/9780198755661.001.0001

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Moneys’ legal hierarchy

Moneys’ legal hierarchy

(p.185) 8 Moneys’ legal hierarchy
Just Financial Markets?

Katharina Pistor

Oxford University Press

This chapter discusses the way in which money is legally constructed and hierarchically structured. In financial markets, participants trade different forms of money, some of which is state-issued and some privately issued. A form of money is closer to the “apex” of the system the closer it is to entities that can issue liquid means or determine acceptable forms of payment, such as central banks and governments. During financial crises, market participants close to the “apex” are systematically advantaged. Various legal devices, e.g. property rights, collateral rights, or trust law, contribute to hierarchically structuring the financial system, by granting preferential treatment to some moneys over others. As the historical development of money shows, public and private entities have been closely intertwined in its creation. These legal constructions reveal questions of justice at the very core of the financial system, with regard to both unchecked hierarchies and unjustified distributions of losses.

Keywords:   money, private money, legal hierarchy, justice, trust law, corporate law, Great Financial Crisis

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