Might Supplementary Domesticated Currencies Reduce Financial System Risks?

Thursday, 2 July 2015: 8:30 AM-10:00 AM
CLM.2.06 (Clement House)
Shann Turnbull, Independent academic, Sydney, Australia; Sustainable Money Working Group, Manchester, United Kingdom; International Institute for Self-governance, Sydney, Australia
The research question is to investigate if supplementary domesticated (tethered) currencies might reduce financial system risks and provide a superior fallback position to Bitcoin in a crisis? To investigate the question, a hypothetical $Z supplementary cost carrying currency is considered whose value is tethered to the retail value of kilo-watt-hours generated from renewable energy. Gesell (1916) proposed cost carrying money that was supported by Fisher (1933), Keynes (1936), Suhr (1989), Buiter (2009) and Menner (2011). Private issues of self-financing self-liquidating cost carrying “Stamp Scrip” money competed successfully with official gold backed currencies during the Great Depression in Europe and the US. The emergence of private cost carrying currencies in Germany since 2003 tethered to the Euro provides evidence of its viability and acceptance. The paper concludes that pegged side chain crypto currency technology provides a basis for for nation states and/or their bioregions to unilaterally establish sovereignty over their financial system to minimize crisis contagion by introducing Tethered, Tagged and Terminating (“3T”) currencies that are better fit for purpose than official digital money. The short-term incentive to facilitate and encourage monetary experiments towards this goal is provided by: (i) the pressing need to establish a more attractive alternative than Bitcoin in the event of another financial crisis, (ii) raise tax revenues by identifying profits shifting and money laundering from tagging transactions and (iii) tracing illegal or terrorist transactions. Because Bitcoin does not meet any of the 3T conditions its tax status should be that of a commodity not a currency.