Wednesday, April 4, 2007

Cyber Money

Money is anything that is generally accepted in exchange for goods and services. One type of "money" that has been growing rapidly in Mainland China recently is "QQ coins"- see the following story:

Is this really money or not? One could view virtual money as the same as real money, since it is exchangeable; an alternative viewpoint is that when you pay real money for virtual money, you're buying a service- the service being access to additional purchases in the virtual world.

Note, however, that until financial intermediaries spring up accepting deposits and issuing loans of QQ coins, there is no multiplier on the size of the QQ money supply.

Thanks to Edward Li for the pointer.

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