This post is about something I don't understand.
Let's start out simple. There are two parallel imaginary worlds: the green world and the red world.
In the green world people use positively-valued green money as the medium of exchange. If I buy something I give the seller my green money in exchange. Green money flows in the opposite direction from all other goods and financial assets. I am not allowed to take green money from someone without their consent. Only the issuer of green money is allowed to create green money. The borrower of green money undertakes an obligation to give green money to the lender at some future date.
In the red world people use negatively-valued red money as the medium of exchange. If I buy something the seller gives me his red money in exchange. Red money flows in the same direction as goods and financial assets. I am not allowed to give red money to someone without their consent. Only the issuer of red money is allowed to destroy red money. The lender of red money undertakes an obligation to accept red money from the borrower at some future date.
There is a symmetry between the red and green worlds; one is the negative mirror-image of the other. But there is also one asymmetry: the red world has a fundamental problem. Each individual can increase his utility by buying more goods and selling less goods, thereby accumulating an infinitely large stock of red money. The bank that issues the red money needs to put some limit on each customer's holdings of red money, to ensure this does not happen. This is not a problem in the green world, because having zero stock of green money sets a natural limit that stops an individual buying, and the individual is fully aware of that limit.
The real world is a red/green world. It has both green money and red money. A positive balance in a chequing account is green money. A negative balance in a chequing account is red money. If I sell my car to Andy, who gives me a cheque for $1,000, the bank reduces my overdraft by $1,000 and increases Andy's overdraft by $1,000. The bank has transferred $1,000 of red money from me to Andy. IIRC my father nearly always used red money. He nearly always ran an overdraft, paying it off once a year when he sold the harvest, to keep the bank manager happy.
In a red/green world, we can define the stock of "gross money" as the absolute sum of red money plus green money, and we can define the stock of "net money" as green money minus red money.
The Bank of Canada.
Canadian commercial banks have chequing accounts at the Bank of Canada. It's a red/green system. If I bank at BMO, and Andy banks at TD, and I sell my car to Andy who pays by cheque, BMO now has a positive balance of $1,000 at the Bank of Canada, and TD now has a negative balance of $1,000 at the Bank of Canada.
But the Bank of Canada sets a 50 basis point spread between the interest it charges TD on red money and the interest it pays BMO on green money. So BMO and TD can both gain if BMO lends TD $1,000 to eliminate both balances, at a rate of interest that splits the spread between the Bank of Canada's two rates of interest. Which is what Canadian commercial banks normally do. So the gross money stock is small, and normally the same as the equally small net money stock, by the end of each day.
- If the Bank of Canada acted differently, and set the same rate of interest on both red and green money, so the spread is zero, then there would be no incentive for BMO and TD to trade in the overnight market. If BMO's customers always sold more to TD customers than vice versa, BMO's chequing account at the Bank of Canada would become more and more positive, and TD's chequing account at the Bank of Canada would get more and more negative. The gross money stock would rise without limit, though the net money stock would not change.
- Or if TD were a risky bank, and if that risk were bigger than a 50 basis point compensation would warrant, there would be no rate of interest at which BMO would lend to TD that TD would accept. Again it is possible for BMO's account at the Bank of Canada to become increasingly positive, and TD's account increasingly negative.
A red/green world faces the same fundamental problem as the red world. A commercial bank will put a limit on each customer's overdraft. Similarly, the Bank of Canada must, at least implicitly, place a limit on commercial banks' overdrafts.
The European Central Bank.
Eurozone national banks have chequing accounts at the European Central Bank. It's a red/green system. They call it TARGET2. But unlike the Bank of Canada's red/green system, there doesn't seem to be any functioning equivalent to the overnight market that eliminates negative balances every evening. The ECB can hold the net money stock fixed, but the gross money stock can rise without limit. Here is the recent data (pdf).
I think you can see where this is going. I don't understand how it is supposed to work.
Worthwhile Canadian Initiative 
“that jigsaw is beckoning”
With all these colourful discussions I am beginning to wonder what colour my blood will be – red or green.
Now, if it’s green, I’ll have to careful I don’t wear blue. As you know, they say “blue and green should never be seen”.
Maybe all white will cover all bases.
“”Same answer (with a minus sign).”
If that’s the case, I won’t be handing in my red money to the CB unless of course I am compelled to.”
If I am compelled to hand in my red money why can I not have symmetrical rights and compell the CB to hand over gold for my green money?
JKH,
I did say in my blog that bank flows in response are also accommodative.
1. 10 bn in the second case.
2. 590 bn goes in reserve assets, 10 bn in “other investment”
3. Germany is in surplus here, so 10bn of residual finance for others.
4. If commercial banks have taken their own action, one has to look at their entries in other investment.
Basically, there’s no reason for autonomous items to equal the current plus capital account balance. The rest are accommodative. These things should be looked at the national level since investors’ portfolio preferences depend and differ strongly for nations.
JKH,
Also like to add that the above numbers are stocks – IIP numbers.
For flows, 590 bn will go in reserve assets. The financial account has net accumulation of financial assets and net incurrence of liabilities and these can be negative as well and tricky and in this case trickier. So that 590bn of TARGET2 change should go in other investment flows, not sure which.
Agreed
Agreed
Agreed (maybe/I guess)
Disagree – I think you’ve misunderstood my point on seeking a generalized definition of an accommodative flow that can apply equally to both TARGET2 as a clearing system and to a single CB clearing system (the latter as a clearing system, without reference to international flows)
But enough said – it’s an abstract point, so let’s leave it there for now
JKH,
If you are talking of a single CB clearing system without reference to international flows, there’s no BOP to begin with. Autonomous flows and accommodative flows were defined keeping BOP in mind.
It may be possible to define similar things for a single CB clearing system but that is a separate issue. A lot of central bank action is accommodative.
JKH said: “Is that what you are arguing – that the words ‘pay to’ have no meaning?”
No. Those words have a meaning. It’s just that we could replace “pay to” with “gurgle to” and the meaning wouldn’t change, IF the accountant knows that what both of these expressions actually mean is that he is supposed to debit the account of the one who instructs and credit the account mentioned after the word ‘to’ in the instruction.
As I said, “pay to” is model-specific language. The accountant might have a dictionary by his side — at the least he has it in his mind — and when he searches for “pay to” in it, he will find the explanation I gave above (“debit the account of the one who instructs…”).
The instruction could have been written in the accountant’s language in the first place, and then he wouldn’t need to use the dictionary. But perhaps it made sense to write the instruction in layperson’s metaphorical language; after all, many have problems with making sense of credits and debits.
The layperson’s language helps to maintain the illusion that something is being transferred. That doesn’t need to be a problem if the people working with macroeconomic theory, or people responsible for the financial system, realize that nothing is transferred, so that they are able to build models which better reflect reality.
(Be careful, please! I’m quite an intense person, so I wouldn’t be surprised if I one day suffer a heart attack. I’m only 37, but I can’t really rule it out even now, I guess.)
Another way to look at this issue:
Nick’s business makes a sale. His accountant records: “CR 100, Sales” and “DR 100, Accounts Receivable”. I don’t know about you, but I would not describe this as a transfer (of anything) between these two accounts.
I’m asking: What makes a checking account different from these two accounts, so that in that case it should make sense to talk about transfers of positive (credit) balances or “money”? Checking accounts are, after all, just accounts. Does it make sense because we are used to think that there is money residing on checking accounts, and that money can be transferred between those accounts (this is how the implicit model we use looks like)?
We are discussing on a very fundamental level now. I’ve been working for three years, day in and day out, on a new theory, and what I say here arises from that work. I say this so that you don’t think that I’m just playing with weird, detached ideas here, like a philosopher might do.
Antti: actually, this is more of a philosophical question.
Imagine a row of 10 light bulbs. The first one lights up, then goes out, followed immediately by the second, then the third, etc. What we “see” is a light moving along the row, even though nothing physical moves.
This is also an economic question, in a very different context. See my example in section 4 of this old post.
I’ve only hardened on my view that “accommodating flow” is a dreadfully counterproductive attempt to categorize the flow of funds. Maybe that’s partly philosophical too. Sometimes context trumps category.
(that category theory apparently attributable to Meade, (i.e. not Ramanan))
Nick: I didn’t say this wasn’t a philosophical question. I can easily see how you can see it as such.
But in the context of the light bulbs, I see my discussion with JKH more like this:
Both JKH and I are physicists. JKH (who is inclined to philosophize) says that he likes to think that the light is “moving along the row”. I don’t want to deny his right to view the phenomenona in the way he suggests. But I ask him to confirm, as a physicist, that there is no light moving/travelling along the row, but only separate light bulbs emitting (I guess this is the right word? I don’t want to use time on Wikipedia now) light, one after another.
If JKH pointed to an instruction sent to a human operator of the light bulbs, and the instruction said “Move light along the row”, then I wouldn’t accept this as a proof that what actually happens is that light is moving, or moved, along the row. If the system was computer-operated, then it would be even clearer that the instruction would really be an instruction to “switch on/off” certain light bulbs.
(If I present JKH, whom I recognize as some kind of demigod when it comes to expertise on the financial system, as a “simpleton” in this example, I do it only for illustrational purposes. It’s also more than possible that it is me, not him, who is wrong — in a way not yet obvious to many. At least all kinds of warning bulbs should light up in my head when I see it possible to present JKH’s case as a simpleton’s case by taking one step towards “absurdum”.)
Antti
Try this:
Would you not agree that using old fashioned paper money is a mode of “payment” of money?
And that it is a transfer of physical currency from one “owner” of that money to another?
And that those paying and those receiving that money can make accounting entries on their balance sheets to reflect those transactions?
Now move to a perfectly synchronized electronic system.
All debits and corresponding credits occur simultaneously, without that physical movement associated with paper money.
But the same result is achieved in terms of the redistribution of money wealth.
And the resulting accounting entries are essentially the same.
And the nature of the instruction is essentially the same – self-directed mobile payment becomes externally directed/instructed electronic payment.
Why would you eliminate the language of “pay” (and receive) just because of this change from paper to electronic?
last sentence :
Why would you eliminate the language of “pay” (and receive) or the language of “transfer” just because of this change from paper to electronic?
I’m basically with JKH on this one. Except I’m also OK with a red paper monetary liability moving in the opposite direction. For me (your mileage may vary) the green and red bits of paper in shoeboxes is a thought-experiment that clarifies because it points to an underlying unity and symmetry, between green paper currency and electronic overdrafts.
For example, I’ve got a draft post on Bitcoin vs LETS. Bitcoin is pure green, and LETS is pure red=green. (Dithering about finishing it and publishing it.)
Antti,
You’ll just have to think of money as “spooky action at a distance”. SAAAD doesn’t stop physicists (well taxpayers anyway) spending billions on particle colliders.
Antti,
Perhaps you should turn your attention to developing a quantum theory of money (rather than the quantity theory of money). 🙂
Antti,
When Nick’s business makes a sale, ownership changes.
Am I correct to say that accounting records ownership and value? Value is found by comparing physical assets to a value scale.
The value of PHYSICAL assets depends upon ownership. In other words, until a sale is made, buyer and seller each attach different values to every physical asset.
There is no reason to make an accounting entry unless EITHER àn ownership change or a value change occurs
If a recordable exchange has occured, how would we know that it was NOT a physical transfer?
Antti, l should have written “If a recordable EVENT has occured, how would we know that it was NOT a physical transfer?”.
Sorry about that.
Henry: Yes, I have compared my view to SAAAD, also in these comment threads. And at least three people, Oliver among them, has pointed me to Quantum Economics when I’ve explained my view. Still it seems my broader view differs from Quantum Economics.
It’s nice to see that you, too, spotted these connections.
Nick: LETS is good. LETS might be our whole monetary system in a nutshell.
JKH: Your explanation is the explanation I’d give if I was asked “Why do we see money, or balances, being transferred between accounts?” I do understand that viewpoint.
My point has to do with primacy. Should there be “primacy of the ledger” or “primacy of currency”? As I said to you earlier: when one understands the accounting, one understands the role currency (a “counter”) plays as part of that accounting. To me, currency is secondary; it’s a way to decentralize the accounting. Currency could be called a “portable credit balance”, and that’s where you get the idea that a certain credit balance can be transferred, right? That idea probably wouldn’t have arisen if we always had had only “account money”, no currency.
So I’d turn your argument around: First (acknowledging the primacy of the ledger) — without reference to currency — we need to explain why it makes sense to say that a certain balance, or “green money”, is transferred between accounts. Then we can look at the special case of physical “counters” which actually do “change hands”.
Schumpeter was thinking along the same lines when he wrote this (posthumously published “Treatise on Money”):
““… in a pure account-settling system the concept of money supply would correspond to nothing at all.” (p. 244) “… in a pure account-settling system there is no analogue for the velocity of the circulation of money… Because in the account-settling system a deposit element disappears with each act of payment and a new item, just as large, is created, it makes no sense to speak of ‘the same’ deposit element just ‘changing hands’.” (p. 247)”
We can see, though, that he wasn’t thinking in terms of overdrafts. A “new item, just as large”, is not always created.
(It’s no wonder we often give primacy to currency, because that’s the money we have grown up with. We, at least I, automatically connect the word ‘money’ with the picture of a note or a coin. That connection is formed when we are kids and we keep on strengthening it even when we are adults. Most of us know that there is no such money residing on our bank accounts, but we cannot help but think in terms of some kind of electronical “counters” even in that case.)
Electronic “counters”, not electronical… (My brain seems to accept also the latter word as valid, which might be due to something I’ve experienced in my childhood.)
Nick: I wrote this to Jamie in my own blog (full comment):
“All Nick’s worlds, even the combined one, are imaginary (even if he says that he finds the combined one to be a model of the real world). How I see this is that Nick wants to discuss the combined red/green world as a (simple) model of the real economy, but wanted to build that world by first introducing the green-only and red-only worlds, so that we can see what he means by ‘red money’ being a medium of exchange.
What I’m trying to argue in my latest discussion with JKH (in Nick’s blog) is that ‘green money’ is not a medium of exchange either, not in Nick’s red/green world nor in the real world — here I seem to agree with Nick that his red/green world might work as a model of the real world. It is obvious to me that ‘red money’ is not a medium of exchange.”
Have I misread your thoughts?
We can see, though, that he wasn’t thinking in terms of overdrafts. A “new item, just as large”, is not always created.
An unused overdraft is just a right to do something, namely incurring a debt to a certain level, it isn’t the same as doing it. As soon as one does, as soon as a credit line is drawn, a new item, just as large, IS created in the account of the, uhm payee. That’s why I don’t get the red money. A world in which nobody has green money / no account is ever positive, is an absurd special case and only valid if one divides the world into a bank / non bank place in the first place and assumes some kind of ‘original debt’ for non banks. Best, imo, to think of it symmetrically, i.e. all financial assets & liabilities always sum to 0 in any closed system. The reason we allow for green bits of paper to circulate but not red ones is that it’s the red part we use to control who’s allowed to do what to which extent (if we so chose). If we chose not to, i.e. if the entries are purely accommodating as in the discussion above, then there is a symmetry. I’m not sure it’s advisable to speak of money or payments in that environment, though. That’s just shit you accountants need to balance your balance sheets. You’re so yin and yang… 😉
Antti: “To me, currency is secondary; it’s a way to decentralize the accounting.”
I like that (the decentralise bit, not so much the secondary bit).
“Have I misread your thoughts?”
I’m not sure. I think that the medium of exchange can be: real goods like cigarets (if everyone in the POW camp buys and sells everything else for cigarets); real bads like garbage; green paper currency; red paper currency; green ledger balances; red ledger balances. There’s an underlying unity and symmetry here.
Roger: I think you should forget real assets. It doesn’t matter here. What we are talking about is entries on accounts in a bank’s ledger; specifically, on accounts where the account-holder is a non-bank. The bank accountant doesn’t care if behind the instructed entries is a transaction where I bought a bicycle from you. He just debits my account and credits yours.
Oliver: “As soon as one does, as soon as a credit line is drawn, a new item, just as large, IS created in the account of the, uhm payee.”
You misunderstood. I’m talking about debiting an account with a positive balance (deposit element disappears) and crediting an account with a negative balance — that is, a USED overdraft (no new item, just as large, is created). Right?
Nick: Sorry, I meant your thoughts on why you started with red-only and green-only world, and if you find your red/green combined world to be a (simple) model of the real world? Like I’ve said earlier, I think you have been very consistent, taking into account that your starting point is that “green money” does serve as a medium of exchange, including in the sense that it is “transferred between accounts”.
You said: “I think that the medium of exchange can be: real goods like cigarets (if everyone in the POW camp buys and sells everything else for cigarets); real bads like garbage; green paper currency; red paper currency; green ledger balances; red ledger balances. There’s an underlying unity and symmetry here.”
I’m just repeating myself, but the way I view this is that goods, and why not “bads” too (although it’s harder), can be seen as a medium of exchange. But then I overlook the paper currency (for a moment), and try to explain what does the accounting (or “account money”) have to do with people trading with each other. Only after I can explain the centralized accounting does it make sense to me to try to explain paper currency (as a way to partly decentralize THAT accounting).
If you approach this in the order I suggest, you won’t make the same mistake as I believe mainstream (and nearly everyone else?) has done, which is to think of money as a commodity/a good. If you start with the centralized accounting and then move to currency, you won’t ever consider money a commodity/a good. I promise 🙂 (I know the “milk is spilled” already. But I was able to free my mind, so why not you, too? It won’t happen without pain, though.)
With “a commodity/a good” I also to refer to all special types of those, like the “nth good” or “zero-th commodity”, etc. As you should know by now, I’m a purist in this sense, so I consider even “a balance” that can be transferred between accounts as a “special good”; it is some kind of ‘item’ or ‘thing’ that can be moved.
Antti
“My point has to do with primacy. Should there be “primacy of the ledger” or “primacy of currency”?”
I dislike the broad brush use of the word “ledger”. Ironically, it makes me think of quill pens, physical currency, and the movie ‘A Christmas Carol”.
I prefer reference to balance sheet, income statement, and flow of funds.
Balance sheet accounting reflects both electronic and physical currency entries.
Consistently.
The word “pay” remains useful, IMO, even in a purely electronic world.
(That Shumpeter quote seems to ignore the balance sheet perspective on money balances (of whatever kind) at a point in time.)
P.S.
I would have preferred your intellectual energy had been available to fight the good fight against the use of that horrendous terminology “accommodating flow”.
(referring to the categorization/standardization of that terminology, rather than its discrete use in specific contexts)
Antti: I admit that my mental default model is green paper fiat currency. Because it’s how I was taught, but also because it’s what I have used, and what many people use. And I work backwards from there to convertible paper, and to commodities, and forwards from there to ledgers, and ledgers with both positive and negative balances.
Sure we can start with ledgers, and work backwards from there. But we must have a perspective that is broad enough to include commodity money too. Because they do exist and have existed.
JKH: I’d be happy to focus my energy on arranging the deckchairs after we get the ship on a safe course again 😉
You said: “I prefer reference to balance sheet, income statement, and flow of funds.”
These are all reports. The ledger, physical or electronic, is where the magic happens. That’s where the records reside. By all means, think in terms of a balance sheet. But do not think (I don’t think you think) that we are really making entries, performing accounting, on a balance sheet. By drawing attention to the balance sheet and especially “flow of funds”, you are just reconfirming your unwillingness to not think in terms of something moving or being transferred.
A balance sheet was a late-comer, even when we are talking about double-entry. There had to be first a need for reporting in that format, after thousands of years of recording items on accounts (in a ledger; I use ‘ledger’ to mean, more or less, all the accounts that are used by that particular accountant).
“would have preferred”
not that this discussion hasn’t been appreciated
🙂
“These are all reports …”
I’m glad that people will be able to see that you’re the accountant and I’m not.
I’m just a user.
🙂
Nick said: “Sure we can start with ledgers, and work backwards from there. But we must have a perspective that is broad enough to include commodity money too. Because they do exist and have existed.”
Thanks, Nick! I’m happy to hear this. I’ll continue with my posts on “A New Monetary System From Scratch” and give you that perspective. (I’ve shared, of course, your “mental default model”. For about 35 years I thought in terms of it.)
Nick: I was unclear. What I meant is that you won’t consider “fiat money” a commodity. I didn’t mean to say anything about pure “commodity money”. I’m fine with calling that ‘money’, if we don’t call “fiat money” ‘money’ (or “fiat”, either… we’ll get to that).
JKH: I know you have appreciated this discussion. You wouldn’t spend so much time on something you’re not interested in. I’m really thankful for you having taken the time to engage with me!
If we don’t get much forward now, I’m sure we can continue when I come up with new posts. I need to broaden the perspective, so that you could better see why I argue what I argue.
Antti, I know what you mean. Negative and positive numbers are netted, they don’t sit next to each other. Not sure that’s what Schumpeter meant, meaning I really don’t know. If I put down the equation -10 + 5 = -5 then on could argue that an item of +5 was created (while somewhere els the same item of -5 was ‘created’. That’s what I was arguing anyway…
Oliver: I see what you mean. But I think (I don’t know) Schumpeter was referring to a textbook case where “my deposit” becomes “your deposit”, while the total amount of deposits remain the same. Not to say that he wouldn’t have understood overdrafts; probably he just had that kind of textbook case in his mind when he wrote that.
“We grew up with currency”.
And we adapt. People no longer try to cover an overdraft by writing a cheque because they understand chequing accounts.
My students rarely use currency. They use debit card and Apple Pay and whatnot. I am not sure if they understand that it’s only bit on a computer but it’s no longer money is “paper with the face of the Queen in the right of canada.”
Antti has already said currency is an asset for some entity to me.
Are demand deposits of the commercial banks an asset to some entity?
Nick, you mention the spread between positive and negative balances.
I’ve been poking around. Apparently negative Target2 balances must pay the rate on the ECB’s main refinancing operations (MRO), and positive balances receive the MRO rate.
The MRO is currently 0%, so Target2 debtors pay nothing and Target2 creditors receive nothing. If it was at 5%, the creditors would get 5% and debtors would pay 1%.
Antti is of course right regarding a strict definition of “funds transfer”. It’s the same conclusion as professor Benjamin Geva, a (legal scholar and historian of payments) in that: “… the characterization of the process as a ‘transfer’ is certainly a misnomer, as in fact nothing tangible or intangible is transferred.”
That’s why, for example, in [R v Preddy (1996) AC 815] it could not be proven that the defendant had obtained or stolen property, even though Preddy & associated had by submitting incorrect information managed to get a loan from a Building Society, and where the sum of the loan was credited to Preddy & Co’s account at another bank. It was not theft because, well, no property could be determined to have been transferred.
Thus we might perhaps consider an electronic transfer (as in a non-cash payment) along the same line as Geva is proposing: “Conceptually, a payment mechanism denotes a payment transaction; it can broadly be described as any machinery facilitating a non-cash payment in monetary value. While authorizing or conferring on the payee the right to claim the sum of payment from a third party, it enables the payor (i) to avoid the transportation of money and its physical delivery to the payee, and (ii) where applicable, to obtain in the process a discharge of a debt owed by the payor to the payee.”
Notice how in such definition that which is “transferred” is value.
For those interested in the history of this particular problem from a legal standpoint, from middle ages to modern times, I would recommend this neat chapter by Geva: ‘Bank Money’ – The Rise, Fall, and Metamorphosis of the ‘Transferable Deposit’
Hope the link passes through any spam filter: https://books.google.fi/books?id=SjfcCwAAQBAJ&lpg=PA361&ots=8BfAWJ-2Em&dq=from%20bailment%20to%20transferable%20deposits&hl=sv&pg=PA359#v=onepage&q=from%20bailment%20to%20transferable%20deposits&f=false
Johan: Thanks, very interesting!
Regarding Geva’s proposition, I (of course!) have some doubts. (And, as you know, I even refuse to use the word ‘payment’ in this sense 😀 But I can play along, for now.)
“While authorizing or conferring on the payee the right to claim the sum of payment from a third party”
What exactly does he mean with this? That the payee has the right to claim currency (“the sum of payment”) from a commercial bank (“third party”)? Or something else?
JP: “The MRO is currently 0%, so Target2 debtors pay nothing and Target2 creditors receive nothing. If it was at 5%, the creditors would get 5% and debtors would pay 1%.”
!!!! So, the current spread is 0%, but in normal times the spread is negative??? And a big negative number???
Man those Yropeans is weird! Canucks know the spread should be positive, and fairly small.
Thanks for figuring that out.
Jacques Rene: yep, but I’m an old guy. Those kids running around with their apps and funny cards, even buying coffee with them!!!
IIRC, as an undergrad in scotland, mid 1970’s, I was one of the very few with a credit card (my father had backed it). 50 pound limit.
Antti,
I think it could be anybody, but in this context it’s probably fine to consider the third party being a bank (or the payee’s bank).
The broader analogy stems vaguely, it seems, from the middle ages where the third party, the “middle man”, i.e., the bailee, was the one delivering the money – initially given by the bailor (owner) to the bailee (possessor) who then was to deliver the sum of money to the beneficiary (new owner). All sorts of legal complications could arise from obligation to deliver vs. failure to deliver. Here it might be sufficient to just say that unless in detinue (maybe money in a sealed bag?), the third party only had to deliver the sum of an equivalent monetary value rather than the same coins received from the bailor. That would via analogy transmit to debit-credit entries in a modern payment system, in that what is to be “delivered” is not the same debit-credit entries – which is impossible – but something of the same monetary value, accomplished through debit-credit entries at the receiving end.
That would, in my reading, be the payees claim vis-à-vis his bank to the same amount/value as what the payor’s bank debiting the payor’s account represents.