What is the Difference between Bills of Exchange and Credit Default Swaps?

lecture 290509

07.07. Novi Sad: Wealth of Nations Conference

It has always caused problems to restrict the creation of money. Adam Smith describes in detail how bills of exchange were kept in circulation during the 18th century, drawn and re-drawn in order to postpone the final payment and to supplement money. The recent wave of financial innovation has lead us deep into a comparable process, thou with some striking differences. The bill of exchange, formerly an innovative financial vehicle, has been serving for a long time now as our standard form of paper-money. Further financial progress enabled our current financial surrogates to reach never imagined heights, in terms of sophistication, global scope and sheer amount of imagined wealth.