Expanding on ceremonial encapsulation: The case of financial innovation

The aim of this paper is to develop a theoretical framework for the study and integration of financial innovation in the institutional structures that support the operation of the monetary system. The background of the analysis comes from original institutional economics (Bush and Tool 2003; Foster [1942] 1981, [1949] 1981; Veblen [1914] 1964, [1889] 1996), the state theory of money (Ingham 2004; Papadopoulos 2009), and a specific account of social ontology based on constitutive and normative rules as well as the notion of collective intentionality (Searle 2005, 2010). The aim is a dynamic framework for the analysis of the institutional evolution of money, whereby institutional change comes from technology, and the state acts both as regulator of the institutional adjustment and guarantor of the stability and the efficiency of the monetary system. In that sense, the framework outlines the context and principles for the government regulation of financial innovation.

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