The discussion on a sovereign money reform is gaining momentum and concrete answers to the questions on how to design a new monetary authority are increasingly demanded: What goals are being pursued? According to which principles and how should the monetary authority create money? How can the right balance between independence, transparency and accountability be found and abuse of power effectively be prevented?
The attached paper discusses these questions and presents some suggestions for the concrete objectives and design of a monetary authority. The result is a radically rethought and drastically simplified monetary institution that has little in common with a traditional central bank. The recommended money creation instruments are grants to the government or a variable citizen dividend, which would ensure simplicity, transparency and independence from both the government and the banking sector. Within this framework, with clear objectives and effective, lean monetary policy instruments, transparency would be logical and a clear liability framework for private commercial banks could be implemented.
Outline:
- Introduction
- Problems with today’s central banks
- Requirements for a better system
- Handling of payment transactions
- Handling the Money Creation Monopoly
- Monetary policy objectives
- The definition of price stability
- Which instruments should be used to create money?
- Possibilities of reducing the money supply
- Independence, transparency and accountability
- Summary and conclusion
- FAQ and further considerations
A PDF of the full paper is attached for download here:
Author: Lino Zeddies lino.zeddies@monetative.de Berlin
Digital money creation by commercial banks should be prohibited in order to go for sovereign money.
Money is to be distinguished from financial commodities(term deposits; treasuries; stocks, etc.) which you can by with money.
Only legal tenders should be considered as money which includes bills and coins in your pocket, bank deposits on demand. All legal tenders should be under direct control of the national monetary authority.
Please see my writings from [youme41.wordpress.com]
A publicly controlled fiat electronic money mechanism could look like this:
Every citizen has an account registered with the central bank.
Every day the government could create new electronic money and for instance deposit 100 dollars into each persons bank account. That would amount to a citizens dividend of 36,500 dollars per person per year. Once you remove the ability of FRB to create debt based bank money the state has more freedom to create sovereign money without inflation. Furthermore the benefit of any low inflation tax goes to the public and may be returned via a citizens dividend.
Every day the government can charge a tax equivalent to interest of .01 percent per dollar in each account. That would be equivalent to a 3.65 percent interest charge per year on each dollar. That would be a Gesellian tax on the holding of money acting as a charge of interest for the use of a public monetary resource in the same way that a Georgist land value tax is rent for a private exclusive use of a public resource.
see http://natrights.blogspot.com/#cash for a natural rights based philosophy of money in the electronic age.