Money as a Network Good

Many economic phenomena, including flows of money, can be treated as manifestations of operation of specific networks. In contrast to the popularity of analyses of network structure and dynamics in sociology and physics, economic investigations concerning network approach in general and network properties of money in particular have not been popular until recently. This paper presents the concept of money as a network good and its features (complementarity, standardization, consumption externalities, switching costs, lock-in, dependence on social preferences and expectations and economies of scale in production). It is asserted that network theory of money may shed new light on such processes as monetary integration.