It is often difficult to explain briefly the shortcomings of the monetary system Current and benefits of the system 100%. I tried to present such information as succinctly and simply as possible.
The proposal
There are two types of deposits: demand deposits (DAV), the amount of which is removable at any time, and time deposits (DAT) to withdraw only from a specific date . In the Eurozone, banks are required to keep 2% of the amounts in VAD and DAT in the central bank. If you have 50 € and 50 € in VED in DAT, your bank must keep at least 2 € in reserve, the rest can be loaned or invested. The very purpose of reform is 100% to pass the reserve requirement to 100% for AVD and leave it unchanged for DAT.
money creation today
The current system allows banks to create and destroy money. In a conventional loan, the lender can not be taken advantage of that when it is delivered by the borrower. Yet, 98% of the amount of VED was lent even though the applicant has the option to withdraw money at any time. This distortion of the natural mechanism loan results in a duplication of the currency by the credit. Imagine you have 2 € and that you pay the same 2 € to 50 different people who would be able to remove these 2 € at any time. If you are a bank, you are in the pure legality. You have reservations of 2 € for 100 € DAV removable at any time. With 2 €, you had the opportunity to create 100 € VED. As the saying goes, recognized by most economists' credits are deposits. " In the opposite direction, the "Repayment of the deposit destroyed"
The 5 major flaws of this system
1 The volume of DAV is virtually uncontrollable by the central bank since it depends essentially on credit growth. Thus, the state has very limited control over the volume of currency in circulation, which is nevertheless an important economic factor
2 This system is tailored to encourage any speculative phenomenon. This elastic currency to create new monetary resources when economic agents seeking to take on debt to speculate on a market in vogue.
3 The interest rate market can play its regulatory role between the supply of savings and credit demand as potentially any monetary credit application potentially creates its own supply.
4 The current system makes it impossible for the healthy process of leveraging public and private sectors. Repayment of credit reducing the amount of DAV, governments have an incentive to encourage public and private debt to avoid a shortage of money.
5 There is at present tremendous opacity surrounding the creation of money. The money supply has doubled between 2000 and 2008 in the euro zone without it know to whom it has received. If the monopoly of money creation returned to the State, the currency issue would fund public spending and reduce by the same tax.
System 100%
System 100% would allow the state to take complete control of the currency issue and disconnect the growth of monetary developments in the credit market. This system would provide an opportunity for the State to limit emissions currency in times of boom and expand in times of crisis without heavily into debt, counter-cyclical policy impossible today.
Transition
bank accounts would be separated into two legal categories clear, the DAV and DAT. For 100 € VED, the bank has 2 € and 98 € reserve for loan (debt). For reform to be 100% effective, it is necessary that the bank had reserves of € 100 to € 100 VED. To do this, the central bank would create € 98 it would give money to banks. Thus, banks have reserves covering 100% DAV they could lend or invest to maintain this ratio of 100%. In exchange, the central bank would become the owner of the 98 € debt. Repayment or sale of these claims would serve to reduce public debt to the tune of several tens of percentage points of GDP.
The 4 main objections
How profitable the management of banks DAV if money can be lent?
management deposits will be charged to customers. Each bank sets its price for this service. The competition law beat her full. With current technology, management of DAV is a minor cost. What money
lend banks as the system 100%?
banks will be able to lend the money deposited in DAT and their capital. The reduction of lending to the economy by freezing the DAV will be equal to the reduction of public debt. Thus, the credit market for private agents will not be affected. The portion
reserves of 2% to 100% he will explode the volume of currency in circulation?
Not at all. After the transition, the amount of DAV and banknotes and coins in circulation has not changed a penny. Banks can no longer use the reserves to cover the DAV, there will be no increase in the volume of money in circulation.
The interest rate will he increase after the transition?
Possibly. If the supply of credit available (DAT + bank capital) is less important than credit demand, interest rates will rise. If the supply of credit is less than demand, interest rates will drop. Interest rates will play their full role regulator between savings and investment.
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