gobanknoteless IMMEDIATE SOLUTION TO GREEK / EUROPEAN DEBT CRISIS
The abolition of the circulation – and the value – of the banknotes is proposed.
Imagine that – after all necessary legislative procedures on the relevant European institutional instruments – on 01/01/201X the 500 € and 200 € banknotes cease from circulating, on 01/07/201X+1 the same happens for the 100 € and 50 € and on 01/01/201 X+1 for the 20€, 10 € and 5€. On this day a new 5 € coin is introduced. The scaling in time will serve to help the public gradually adjust and for the supply and installation of necessary equipment and connections. It will also give the time for depositing the whole of circulating money to the banks All transactions, therefore excluding the very small value ones will be carried by credit or debit cards or via internet or mobile banking.
IMMEDIATE RESULTS 1. Complete supervision of the European States onto the total GDP and onto the whole turnover of each financial entity and therefore possibility to fully cover the entire tax base for any person regarding direct (income) or indirect taxes (VAT etc.). 2. Therefore true perspective for public economics healing through the GDP growth and mainly due to increased government revenues, that otherwise couldn’t be expected. 3. Ability hence for reducing tax rates and thus further enhancing the development.
INDIRECT EFFECTS (PERHAPS MOST IMPORTANT!) 1. Elimination of crime – particularly organized one as it won’t pay !. There would be now only honour murders, hate based assaults etc. 2. There is no possibility of extraction of profit and therefore no ground for drug dealing, person trafficking, gun smuggling, abductions, extortion, bribing, or for illegal immigration! Not even for illegal gambling! 3. Huge benefit for the society by removing any risk of robberies, burglaries, thefts, kidnappings, etc., as well as bribery, corruption, blackmail, etc. 4. Out coming for a release of the social potential of the State due to extreme reduction at the workload for a range of public services (courts, police, prisons, etc.)
REPLY TO THOSE who would say, “These things cannot happen” Until now they could not happen because there was not the necessary technology. Now they can be immediately applied. We already have in use the system of Treasury Bonds for shares and real estate property (land registries), that shows us that it is possible to eliminate the violent crime associated with values, provided they (the values) are not immediately tangible and portable. It is a different matter the possibility of fraud, however, it does not involve violence and all what it induces and means.
SMALL TRANSACTIONS The coins serve the small movements of the population (newspaper, bread, Candle Stands Church, charity, etc.) which logically would be inconvenient to require any paper or electronic action. It is however obviously not retaining any worth mentioning criminal activity.
Opposing: Only the side of organized crime will be strongly opposed to this development. The tax-fraudsters will also be upset but overall they will enjoy the benefits of a better and richer society. Those who raise issues of surveillance and personal data should reflect that the State can already easily monitor anyone it has a reason to do so. Also, confidentiality provisions of the various components of transactions can be taken apart of the ones of purely fiscal interest, in the same way that similar techniques now ensure the privacy of our various codes on the internet or mobile banking.
EXTENT OF IMPLEMENTATION: The proposed transformation could be applied in one country. Ideally, however, the implementation of the new system in all countries of the Euro zone may be a catalyst boosting the development for the European Union to work better economically and solve finally and gently (!) – among many others – the problem of illegal immigration as only legal immigrants will have the means to trade and therefore there will be no incentive for other to flow in.
SYSTEMIC REMARK: The proposal does not affect the capitalist system. It can continue functioning undisturbed, while in the same time ensuring the most unexpected liquidity for banks after all the money will go to them! Banks will also benefit from cost savings on safety, cash moving, etc.
ANY NECESSARY GOVERNMENT TRANSACTIONS NOT SUITABLE FOR NEW SYSTEM: It is possible to perform any required “in cash” transactions (secret funds of Ministry of Foreign Affairs etc) using the state gold or another foreign currency.
ANALYTICAL COMMENT OF CERTAIN POINTS OF THE PROPOSAL AND THE CONSEQUENCES OF IT
TAXATION: With the adoption of the proposal it is clear that all transactions will be driven eventually to be executed by cards or electronically i.e. by recordable ways and therefore apparent to the tax authorities. So we eliminate the possibility of any professional to impose or to submit towards a customer paying with cash and without the adoption of proportional tax asset, in order to avoid taxation at the rate that corresponds to real income. This leads to the following individual results: It ensures extremely higher tax revenue for the state as they will be brought up all, the not illegal of course but hidden income – being common sense in Greece that they are of a comparable size to the entire GDP of the State. Possibility for immediate extraction of specific state revenues generated from indirect taxes since it will be possible to directly transfer part of the transaction amount that represents state income e.g. VAT simultaneously with the transaction. A form of organizing this is as follows: For every professional there will have been designated an ‘intermediary’ bank account to which you will be directed to make any payment to him. That bill will have established a link with a relevant State account into which the appropriate state revenue will be transferred while the balance will be left available to the account holder or will be further moved in a next step – witch would be also an automatic procedure – to another account of his own management. Even the distinction on the different VAT rates (as applicable depending on the products purchased or consumed) can be served in respect of different ‘intermediate’ accounts. A similar procedure could be applied even for direct taxes according to existing tax brackets and rates. Anyway it is obvious that in this way the state revenues can be collected simultaneously with the conduction of each transaction and in full. Secondarily it is highlighted the parallel effect of largely eliminating the need for adoption and issuing of various tax items and documents and surely, however, the feasibility of collection of paper receipts by the consumers and even invoices and so on. It also leads to catalytic impairment of the workload for the tax authorities and the relevantly needed staff, further leading to a reduction in operating costs or at least giving them the ability to shift their activity to more effective and productive revenue items. The implementation of the new system also can show us that it leads to a full display of prices holding in real estate transactions and therefore a corresponding increase in tax revenue and a possible further drop of the quite successful up to date system of objective determination of the value of the property with any complexity or bureaucracy it has introduced. We note here that, as we already have said, all these new increased odds of tax sources, will reasonably give the possibility of significant reductions in their respective tax rates, thereby directly favoring the whole economic activity and the healthy longer and productive operation of the country.
Finally, the expected GDP growth estimated by the known rates of informal economy may reach in Greece even 50% making it obvious that in addition to other favorable effects, it will bring immediate and complete reversal of current correlations between debt and GDP of the State (over 160%) and will directly put Greece outside the current framework of financial supervision and disciplinary forms of forced adjustments. This seems to be true for other European countries (Italy etc.)
TECHNOLOGY We believe that the main volume of trade will shift to the credit or debit cards. There will be, however, other ways. A practical way of conducting routine transactions can one imagine that would be proportionate to the currently used contributions to various charitable purposes or raffles etc via mobile. We refer to a call or an SMS to a particular phone number where you cause transfer of the amount to be transmitted in the SMS to the owner of the respective “intermediary” account. This transfer may as well be subject to confirmation by the purchaser who will be asked via a new SMS and will confirm through a final SMS. The transaction will appear eventually as a complete transfer of the amount of the transaction that will be sent to the mobile phone or to the computer of the payee in order to ensure the payment and thereafter deliver the product. The process may further provide the possibility of any consumer of defining a threshold amount above which confirmation is required in order to facilitate business, as well as a daily or any other time span limit of payment for the purpose of controlling expenses.
CRIME: Regarding the elimination of crime – particularly the organized as mentioned in the brief description of the proposal – we note that we have already met the commentary that we anyway are already moving towards the same outcome since it has already been implemented as mandatory to carry out all transactions greater than a threshold (1.500 € now in Greece) through bank drafts. This is where the difference of our proposal lays. The difference is that it does not merely prohibit use of cash – apparently banknotes – in trade of some magnitude, but goes to the whole objective of eliminating this very possibility through the absence of notes. This is because, although the current status quo calls for transactions via checks, it is common knowledge that as far as we refer to the legitimate trade, any transaction that may be wanted hidden is conducted in cash, let alone the fact that it is the standard for the illegal trade or any other illegal action. It is also clear that the possibility of handling cash is the only tool that makes any illegal activity possible and it is for this very reason that the disappearance of this unique tool will remove the medium and therefore the purpose of committing any crime for financial gain apart from fraud. It is this way that we expect the catalytic consequence of our proposal, that would really change the social life that now runs steadily in all its functions and phases through the dangers of violence for money. From bulling in school halls and yards up to the action of purse lifting, the small or large robberies and burglaries, to assaults against the elderly, as well as all aspects of corruption from the most junior employee who occasionally requires a “gift” up to the Minister that jeopardizes important state affairs pursuing personal or his political party financing.
MATURITY: It is a reasonably asked question put out by those who have read my proposal, “Why the proposed system has not been implemented up to now?” Our answer is that until now it was not applicable because the necessary technology did not exist. Now that there is a technological diversity and an extended geographic coverage of mobile networks as well as broadband ones, making it possible to obtain a universal implementation, there are apparent reasons for it. It is also very probable that the same proposal has already been made elsewhere or is under discussion. I wish it is so. I believe however that Europe has – in comparison to other regions – the best conditions in order to implement the proposed system. Our continent and in particular the European Union surpasses any other territory in terms of cohesion parameters, geographic location, infrastructure, no illiteracy, an adequate level of living standards and a common sense for action and innovative steps. Already in Greece the system of bank cards and the use of ATMs is implemented and used by retirees, a portion of the population that is aged and in a reduced rate of grammatical knowledge, something totally unforeseen before. It is therefore feasible to achieve a universal use of the new system after a sufficient phase of information and gradual adjustments. Besides, we consider all the advantages of the proposed system, economic and especially social, will quickly generate imitators worldwide in all countries that are technologically able to implement it.
We mentioned above the present system of Treasury Bonds for shares and contracts – land registry – registry etc on real estate, to prove that for values that someone cannot take possess of by physical rapture, no violent attempt to obtain them can have any luck, meaning as violence either the direct physical violence towards the holder or the indirect (threats, kidnappings, extortion) violence since the recording of transfers of any amount of money would make any such attempt ineffective.
COINS: The maintenance of low value transactions with the use of coins will serve the small movements of the population (newspaper, bread, Candle Stands Church, charity, etc.) for the following reasons: It would be of a great inconvenience to the people if for any transaction that is made very often he was forced to do anything more than pull a few coins out of his pocket. The transfer of small amounts in the cases that may not even qualify as a trade (Candle Stands Church, charity, treat of the grandfather or grandmother towards grandchild) is reasonable not to be harmed or hindered in any way since these are practical no economic moves of any interest on the grounds of tax ‘arresting’. As far as quantitative questions arise, here are some facts: Due to ECB statistic data (http://www.ecb.int/stats/euro/circulation/html/index.en.html) the total Euro coin quantity sums 23,073 millions while the 5euro banknotes sum 7,700 millions (in a 888,600 millions of total euro banknotes). This means a total of 30,073 millions euro value in coins, further corresponding (absolutely roughly) to 93 euros for each one of the 332 millions Eurozone citizens, or 103 euros per person if we exclude a 10% for the infantry and for the people no-matter-why incapable of any transaction. This leaves enough “change” for every body to go around everyday life regarding a weekly “turn over and refilling” of coins.
REACTIONS: In the investigation of possible opposition that the proposed system could meet, and having especially in mind the church, it is clear that it is highly desirable – as for every innovation – not to be entered against the new system. To that end it should not cause any reduction of the revenues of the temples. This is served practically in full with the preservation of coins. In addition we should also comply with the obvious condition – as it was done for the introduction of tax-card in Greece– that the Church will verify that the whole system is screened so as to be reassured of non-presence of any symbol, number, etc. that could cause the reactions. In this way we think that the use of coin retains the existing and well rooted relationship of Christians with the candle lit, and does not trigger any formal reaction. As far as the organized crime is concerned, we hope that it does not have the power to have a public presence strong enough to require and achieve the continuation of the existence of the instrument that makes it operational, fruitful and active. At least from the time that some governments will adopt the proposal and the new system is shown in practice, we assume that the results will draw a widespread public support. Besides, the existence of only coins is obvious that objectively prevents any appreciable movement of money and even physically – weight, volume – makes it impossible. We are here to remember that Lycurgus introduced in ancient Sparta the use of only big iron coins to discourage the accumulation of wealth. The conditions now of course are totally different but the physical size and weight still has its favorable influence on the maneuver. There will be presented certainly resentment from fraudsters of any kind. In considering this we mainly refer to the various professionals who avoid the appearance of real income, and we expect that indeed their activity will be affected drastically. While the customer base and turnover ratio is not inherent to fall – perhaps to increase – the taxes they will be called to pay will surely increase drastically. Anyway this very change is the one that restores the well meant equal involvement of all population in public burdens and simply puts an end to the era in witch they would benefit from the weakness of the system to control them. It also exempts consumers who either by pursuing an immediate small profit – sharing of tax avoidance – would prefer not to demand the proper receipt of payment, or would be reluctant to ask for proof of it, feeling a weakness in their transactions e.g. fearing that the craftsman would not serve them ever again, or that the doctor in whose hands they had placed their health would be unsatisfied. All these will definitely be unhappy but overall they will enjoy the benefits of a better and richer society. Here we have to consider the range of jobs and occupations that may be created or strengthened in their activity. Companies and information technicians as well as the whole range of related mechanisms, as well as these related to the mobile telephony and to the banking sector will have an increased economic activity.
PERSONAL DATA: As far as the state monitoring of citizens’ activities is concerned, it is well known that any government can easily watch anybody it has a reason to do so. It is therefore unrealistic that an easier monitoring that is assumed to be possible, will have any meaning to be enforced, for the sole reason that it will be easier. It is known that too much information ends to be more “noise” that obscures the searched information. Besides it is obvious that by the appropriate regulations, every measure can be taken to respect the appropriate confidentiality provisions of the various components of the transactions beyond the purely fiscal interest, just in the same way that it is now ensured that the privacy of our various codes and passwords on the internet or mobile banking is being right withheld. In particular, a first simple suggestion is that in each transaction the sole recording that will be done will refer merely on the inflow of money into the “intermediate” account and will by no means be accompanied by a corresponding record of the “paying” account, except the case something like that is explicitly asked by the payer. The relative technological development of cryptographic systems, however, has already given the solution to these issues with the methods of “blind digital signature” which achieves the protection of privacy to hide the details of transactions and allow the control and security of transactions (D. Chaum “Blind Signatures for Untraceable Payments” in Advances in Cryptology-CRYPTO ’82 pp 192-203, 1982, D. Chaum, “Blind Signatures System,” in Advances in Cryptology-CRYPTO ’83, 1984, D. Chaum, ” Security Without Identification: Transaction Systems to Make Big Brother Obsolete “, Communication of the ACM, vol. 28, pp 1030-1044, October 1985 and many other relevant research studies and publications). Potentially one can also have several accounts and apply different tactics for everyone. Let us note here as opposed to the above concerns the possibility that is nowadays present for all our conversations through mobile and fixed telephony to be captured. Who worries about this anymore? Or even cares? Only when someone tries to avoid detection of him or its business contacts, there is a problem, but it is well known that eventually everything becomes knowledge of the monitoring mechanisms. Links : http://www.cs.ucla.edu/~rafail/PUBLIC/30.pdf, http://en.wikipedia.org/wiki/Blind_signature and many more
RANGE OF APPLICATION: The scope of the system is also interesting. I think that it could be applied even in just one country. Internally it would result in all above mentioned, with only conflict on the circulation of banknotes from neighboring countries if we are talking about a country with a common currency with others like Greece. As long as the system is implemented in all countries of the Euro (or otherwise in a country that is issuing its own currency and therefore these currency banknotes are permanently removed) there it can be a real catalyst propelling development for the corresponding country or countries. Especially the European Union due to its economic and cultural situation is obviously in better position compared to any other country (except perhaps small advanced countries in Asia or America). In any case our interest is in the European Union’s future and it is with it in mind that we talk. The European Union in addition to other benefits will benefit of the new system to solve the problem of illegal immigrants of any kind (job search, trafficking, criminal trafficking, organ trafficking, etc.) With the inability to participate in the life of a country if one does not live legally and with full rights and opportunities of financial transactions, there is a total elimination – in the most mild and not confrontational way – of the problem of further immigrant flows.
POLITICS: In our proposal it is also obvious that it maintains the capitalist system untouched. Regardless of every single person’s beliefs this proposal is to be applied in the framework of the existing system without challenging the policy options it supports. This observation is made, for this proposal to be considered as a purely technical one and only as a tool that does not address the political side issues. The proposal can be considered as even supportive of the system as it ends in a better society without posing political issues, i.e. issues that are just object of politics, but we consider that such an improvement is both a desirable and welcomed one anyway, and in the other hand it does not prevent by any means the conduct of political life and social conflict in order to even better improvements. Additionally, the ensuring of an exceptionally increased liquidity for banks since all circulating money will go to them is even a better actor that the system’s political forces can use depending on the prevalence of the one or the other. From the data published by the Bank of Greece and the Euro system, all the money in the form of banknotes amounts in Greece around 20 billion Euros and in the entire euro zone about 865 billion Euros.
PHYSICAL EXPLANATION OF THE SYSTEM: Finally I try a comment – without having any academic knowledge on the subject – on the physical interpretation of the proposal in relation to the concept of money as an object. It is emphatically stressed out from the beginning that we are not referring to money as a concept that represents a conventional and uniform basis for matching values to be used in several transactions but we are referring to banknotes as a physical object. From the starting of its use, money as an entity has been a physical object that usually incorporates into the specific object the value of its own material’s quantity. That means that it was an item, of an agreed value that served as an easy token to carry, store and count, helping the exchange of other goods or services, etc. This use of physical objects of certain value continued up to the issue of banknotes. The notes – whether or not the relevant authorities and states followed the rule of matching the State gold – ceased to have any value as physical objects, and they only have the value shown on them. Their value, therefore, instead of that of the physical matter, shifted to the information they carry. The detailed and elaborate printing of them only serves to make it difficult to repeat the banknote exactly, thus achieving to have each banknote as the sole representative of an agreed value. It is obvious that if we refer to the gold as money, counterfeiting consists to deficient making of it in order to keep the precious metal, while on the other hand if we refer to banknotes it is the indicated information of value that the forger attempts to simulate. A simple thought confirmatory of the above is as follows: One gold coin cut in the middle still has the value of half the entire former gold coin. A bill cut in half, has no value at all or has all its value if it is the piece that the issuing bank recognizes as the part carrying the critical element of information which it serves. The whole system is thus roughly described as follows: The total amount of money of a State or of an issuing authority has a specified size. This may correspond to gold of the relevant State or not. For us here it is indifferent. Every bill brings on it the information that symbolizes and represents a specific fraction of all money issued. Simultaneously the social contract states that this fraction of all money belongs to whoever has this bill in his hands. The value of paper money, thus, gets its status from the information that it bears. The possibility, therefore, for transferring the ownership of that fraction of the total money from one person to another by just changing the hands that hold the paper banknotes, stands on the fact that it has been agreed that the information about the value of each banknote designates the given fraction of the total money as the property of the bearer. Therefore as long as we have the possibility, due to the technological maturity of communications and information technologies, to achieve this differentiation of the mode of ownership of that fraction of the total money from one person to another, abandoning the material means of recording this information on paper, and replacing it with the remote transfer of the information of ownership by making the corresponding changes in the accounts of these two individuals, then we have achieved our goal with all direct and indirect effects that have been analyzed. The coins will continue to simply play their current role as we already mentioned in small transactions. They will not be needed any more as “change” since all payments will be made with accurate transfer of any amount. The procurement of common coins for small transactions will be possible from ATMs with the relevant technical adjustments, while the ‘making of change’ e.g. in a bakery, of an amount using the card for coins will show then the tax base for that professional due to that when earning coins it will not be required to issue a receipt. The tax base of these professionals may anyway be apparent in the phase they will deposit the collected coins to be credited to their accounts. All just mentioned, make clear the future need to have some procedures changed, being reasonable to have them influenced by such a major transition to a new system. Please note that we should not be looking for the exact application of current procedures under the new system, but be ready to think with an open mind to new settings, always in the direction of simplification and well serve of the main purpose of both money and the tax framework. All these make clear that in our proposal we do not affect neither the concept of money as an agreed transaction means nor any arrangement regarding the money supply, etc. Again, just as there is not a bill of 1.000 € value, after the above effort for “theoretical” interpretation of the transition, we think that it is possible and feasible to gradually remove the existence of all the notes making the corresponding deposits into bank accounts of all non-coin money.
I hope to the wider possible discussion to begin, and aim to a broad publicity that eventually would call European governments to examine and adopt the proposed system.
Any observations, or amelioration suggestions please be forwarded to firstname.lastname@example.org or directly posted at gobanknoteless.wordpress.com.
CLARIFICATIONS – ANSWERS TO USUAL MISUNDERSTANDINGS OR COMPLAINTS ETC
ü It is not a policy proposal.§ It is an absolutely neutral solution.
ü It has nothing to do with Bitcoin or other digital currency.§ It concerns the official currency of each country.
ü “The idea is an old one”§ Or “This is where we are moving anyway”. Very nice. So let’s apply it the sooner we can. Why waste time even of a generation?
ü Personal data.§ The issue is covered with blind digital signatures.
ü “The black money moves otherwise”. The point is not to produce more black money. Whatever came out came out, but at least we should stop it now.
ü «The “strong ones” will not accept it» Let us discuss publicly with those who have no objection and let’s see how the opposites will withstand our arguments.
ü I stress that the proposal is not about economics or politics.§ Relates only to the notes as objects, whatever use they enable contrary to the interests of society. I can not and I do not want to have any opinion (in the context of this discussion) on economic issues as the proposal is briefed into only these two words: