Abstract

This paper develops a novel theoretical framework that reconceptualizes money as information, extending the classical Quantity Theory of Money through information theory. By substituting Shannon’s entropy equation for the traditional quantity of money variable in Fisher’s equation of exchange, we establish a new analytical framework for understanding monetary phenomena. Our approach yields three primary contributions. First, we demonstrate how monetary systems can be analyzed through their informational properties, with particular attention to limit cases where informational entropy approaches zero (analogous to gold standard systems) or infinity (corresponding to hyperinflationary scenarios). Second, we explore how this informational perspective provides new insights into monetary stability and policy effectiveness, especially relevant for digital currencies and modern financial systems. Third, we examine the philosophical implications of viewing money as information, engaging with questions of ontology, phenomenology, and ethics in monetary systems. The framework proves particularly valuable for analyzing contemporary monetary phenomena, including cryptocurrency systems and digital central bank currencies. Our findings suggest that monetary stability depends not merely on quantitative factors but on the quality and reliability of information transmission within the economic system, offering new perspectives for monetary policy and financial system design.

This work is licensed under a Creative Commons Attribution 4.0 License.