Public discussion on moneytary system initiated by UK government

https://www.gov.uk/government/consultations/cash-and-digital-payments-in-the-new-economy

영국정부가 현금과 온라인결재에 관한 새로운 정책방향을 잡기 위하여 사회일반으로부터 다양한 의견을 듣기로 했습니다.

6월 5일까지 의견을 제출하라면서 그동안 당국에서 파악한 현황과 문제점을 정리한 자료를 공개하였습니다.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/689234/Cash_and_digital_payments_in_the_new_economy.pdf

이 자료에서 눈에 띄는 내용은 제가 지난 1월21일에 발표한 “미국 달러를 개혁하기 위한 담대한 제안들”에서 제시한 “지폐 교체”의 아이디어가 영국에선 이미 2016년 9월부터 5파운드 지폐를 시작으로 1파운드 동전, 10파운드 지폐 이렇게 순차적으로 새것으로 교체하는 중에 있으며, 20파운드 지폐는 2020년에 새 돈으로 바꾼다 하며 최고액권인 50파운드 짜리에 대해서는 언급이 없습니다.

각 권종별로 6개월에서 9개월간의 교환 기간을 허용하였고, 구권은 더 이상 법정지불수단이 아님을 공표하였답니다.

지하경제를 억제하고 돈세탁을 방지하기 위해 디지털화폐의 사용을 권장한다면서 이처럼 소액권부터 교체하고 고액권은 아직 시작도 못하고 있는 것이 좀 의아합니다.

디지털 지급수단이 갈수록 많이 사용되는 추세라며 10년 후는 어떤 모습일지를 묻는 당국의 속내가 진정 무엇인지 아리송송합니다.

아쉬운 것은 신권, 혹은 새로운 동전으로 교체하며 예전 돈은 무효로 하였는데 통계상 발행된 옛 돈중에 교환을 위해 당국으로 되돌아 오지 못하고 실권(무효화)된 것이 얼마나 되는지 밝혀주지 않은 점입니다.

현찰사용에 익숙한 시민들에 대한 배려로 보다 손쉽게 현금을 만질 수 있게한다는 방침을 천명하고, ATM(현금인출기) 접근성 유지와 전국의 우체국에서 현금인출을 보장힐 것이라 합니다.

영국의 시민단체 – positivemoney.org에서는 종합적인 의견서를 제출할 것이라 하는데 어떠한 결론으로 귀결될른지 주목됩니다.

 

Bold suggestions to reform US Dollar

As an independent thinker I’ve been studying monetary system for years. So far I’ve published my ideas mostly inside Korean networks.

This is the conclusive essence of my ideas up to date and implemented in the case of US Dollar.

1. Transform the FED into National Bank of the US

Current Fed system is a cartel of private banks hard to find such an example anywhere in the world.

New National Bank of the US is to be a independent central bank accountable only to the general public. Its main functions are :

(a) to issue and control currencies(legal tenders) including electronic money,

(b) to keep the value of national currency and debt stable to support sustainable growth of the economy,

(c) lender of last resort.

2. Replace current paper bills with newly designed NBoUS bills

This is to restrain cash hoarding. Currency is supposed to be in circulation rather than hoarded in a private vault.

Recent Data from the Fed shows that about $1.61 trillion were in circulation. The process goes like this:

(a) to prepare enough amount of new bills to replace all of the old bills and distribute this new bills to each and every depository financial institutions.

(b) to announce detail schedule for this replacement allowing at least 3 months of interim period that after then any old bills still in circulation to be nullified and strictly prohibited to be used as any type of payment and start to pay out with new bills simultanouly including ATMs.

(c) to set a maximum amount to claim new cash up to 1 million dollars and over that limit to be put into demand deposit while unlimited acceptance of old bills is guaranteed for deposit before the closing date for replacement.

(d) also to announce that the monetary authority has the discretion to do another replacement anytime after 3 years in the future.

3. Turn cash equivalent deposits into digital currency and get a new currency data integrated with tangible currency

Fed’s money stock data shows that total M1 as of December 2017 was $3.66 trillion. From there currency in circulation of $1.61 trillion subtracted, we get $2.05 trillion of cash equivalent deposits. These cash like deposits are money created by commercial banks by monetizing clients’ assets provided  as collateral into demand deposit. There is another type of deposit transferred from government as social security benefit or corporations as payroll.

A few years ago the BoE debate argued that as money was created together with debt, paying off debt is synonym of destroying money.

This notion I can’t agree at all. Banks should put the fund made available by payment of debt into circulation again as new investment or loan  rather than put into central bank account as excessive reserve balance. Looking at the Fed data, this excessive balance is $2.11 trillion which is enough to cover all the deposits on demand or checkable.

It seems to me thus that US banking system is already achieving 100% reserve if only we admit that money in the form of cash equivalent deposit belongs to each depositors not to the banks, and banks should keep this money in the form of cash in vault or reserve balance at the central bank.

The next steps required are:

(a) to diffuse the acknowledgement nationally that money kept in the cash like accounts at any legitimate financial institution is same as tangible cash, same legal tender, bearing no interest. Therefore it’s appropriate that to say cash or currency it means not only tangible one but also digital.

Also it must be acknowledged that money creation is to be managed solely by the central bank, and commercial banks are to be just intermediaries.

(b) to rename those accounts of checking or checkable savings to a simple cash account and there is no need for any deposit insurance for this.

(c) to integrate and upgrade the national payment system to secure same day settlements by applying advanced new technology like block chain.

– local payments between accounts within same institution to be settled locally

4. Realignment of national debt

Current Fed Data shows that government debt of $19.28 tn is subdivided as $16.23 tn of Federal treasury debt and $3.03 tn of state & local.

Outstanding federal treasury debt has occurred mostly by refinancing previous debts which we’ve already forgotten its original purposes or scale.

National debt, especially treasury securities(bill, note, bond) are the most trusted financial instruments because its payment in currency at the maturity is guaranteed by the U.S. government. Suggested tasks are:

(a) to treat national debt as future currency, so the price of these debt securities should be managed stable within long term inflation target.

To do so the new central bank needs to be mandated and allowed to participate in scheduled auction and secondary market to purchase and hold them

with newly created currency, which effectively increase the money stock. The logic for this scheme is that central bank has to work for the public not for a few oligarchs.

(b) foreign investors holding national debt to be regarded as quasi citizen in terms of money. So they are expected to respect our order and authority.

And also if we hold other country’s national debt, vice versa.

5. Source deduction of income tax on financial gains

Every institutions providing financial services to their customers are well posioned to collect income tax before paying out the gains.

Financial gains can be difined as money taken out from a account in exess of money put into that account.

So any interest or dividend paid into that account is tax deferred until actual withdraw of it.

Money should be

I believe that we, the people, should be able to establish a common sense about money.
1. What is money? How do you distinguish between money and goods and services you can buy with money? What is the difference between money and financial instruments marketed by institutions like banks or investment companies?
My answer: Money is legal tender. Non-negotiable. Protected by the authority of a sovereign government to keep its value and credibility.
So, gold is not money. U.S. dollar in Argentine is not legal tender.
Cash denominated in the nation’s currency unit is the original money in the form of paper bills or coins.
We can call this type of money as [Tangible Cash].
2. However, we have to take the reality in account.
People believe that money they put in their account with any authorized financial institutions belongs to them.
But the bankers’ thoughts are not the same.
Also, money can be transferred from account to account instantly without any actual moving of tangible cash with no barrier of locational distance.
Those funds in checking accounts or checkable savings accounts are working and considered by the account holders
same as tangible cash. It’s also legal tender.
We can call this as [Virtual Cash or Digital Cash].
Looking at any specific economy in current world, total money represented by tangible cash is much smaller than the amount represented by virtual cash.
This virtual cash is created by the banking system according to the theory of fractional reserve system.
However, most of the banking system is controlled and owned by private interests. It is illegitimate and unconstitutional. That’s the problem. That theory is a fraud.
Legal tenders, tangible or virtual, must be controlled by the public and for the public. Once issued, cash should remain in circulation. Appropriate anti-hoarding scheme should be implemented.
We should change the accounting system for the banking sector. In terms of cash accounting, every participants in the economy must be treated under the same principle and rules. No fractional reserve! 100% reserve must be required. Each deposit banks should report to the central bank how much cash is short to make up this 100% reserve to back all the virtual cash which belongs to the depositors.
This shortage could be filled either by raising capital from their share holders or borrowing from the central bank.
It should be realized that only the central bank owned by the nation and serving for the people of the nation can create money – legal tenders. That’s the common sense!
3. Government bond as future money or potential cash.
Outstanding national debt in the form of treasury bond represents the official promise of the government that at the maturity its face amount is guaranteed to be paid to the bond holder in cash. Originally it was issued by the government and sold to the investors at discounted price.
So, current value of the total outstanding bond can be calculated by discounting the face value at the current rate of central bank fund.
We can call this as [potential cash].
Central bank should be mandated to keep the stability of price not only of its currency but also of national bond.
To support this mandate, central bank should be authorized
to be able to convert potential cash into tangible cash or virtual cash. This converted cash can be used only for redeeming government bonds.
4. New mandates for the banks and all licensed financial institutions: First of all, they are supposed to cooperate with the authority to support the monetary system to keep it stable and trustworthy. Secondly, I’d like to suggest that as account managers for investors or depositors, these institutions are well positioned to collect income taxes from each account before they pay out the gains earned from that account.
Just like the pay roll tax for most employees, investors and speculators are expected to pay fair portion of tax on monetary gains. Monetary gains can be defined as: any amount of money taken out from the account in excess of the amount put into that account.

 

Money in circulation by currencies

 :: STOCK OF NARROW MONEY
“Stock of money compares “”M1″” which is the total quantity of currency in circulation (notes and coins) plus demand deposits denominated in the national currency, held by nonbank financial institutions, state and local governments, nonfinancial public enterprises, and the private sector of the economy. The national currency units have been converted to US dollars at the closing exchange rate on the date of the information.”
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Rank Country STOCK OF NARROW MONEY Date of Information
1.  China $7,015,000,000,000 31 December 2016 est.
2 European Union $6,613,000,000,000 31 December 2015 est.
3 Japan $6,314,000,000,000 31 December 2016 est.
4 United States $3,311,000,000,000 31 December 2016 est.
5 Korea, South $733,400,000,000 31 December 2016 est.
6 Canada $635,500,000,000 31 December 2016 est.
7 Switzerland $504,900,000,000 31 December 2016 est.
8 Taiwan $503,500,000,000 31 December 2016 est.
9 India $385,900,000,000 31 December 2016 est.
10 Saudi Arabia $295,500,000,000 31 December 2016 est.
11 Hong Kong $270,600,000,000 31 December 2016 est.
12 Venezuela $216,100,000,000 31 December 2016 est.