Could Regulation of Alternative Types of E-Money Reduce Systemic Risks and Costs?

28 Pages Posted: 16 May 2013

See all articles by Shann Turnbull

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance

Date Written: May 7, 2013


This paper considers criteria for regulators to accept non-official currencies that could make a contribution in reducing systemic risks and costs. Cell phone technology has made practical the re-introduction of negative interest rate/cost carrying money widely introduced privately in Europe and the US during the Great Depression. Fisher and Keynes supported the private issue of cost carrying notes and in this century Buiter has described the benefits of negative interest rate money. Four options for regulators to accept it are considered: (1) a government issue redeemable into legal tender as proposed by the US Bankhead-Pettengill Bill of 1933; (2) private issues redeemable into official money as occurred during the Great Depression that has remerged in Germany; (3) private issues convertible into specified commodities as occurred in Europe in the 1920’s; and (4) a unit of value defined by the retail value of electricity generated from benign sustainable resources of the host bio-region. Arguments for regulators to accommodate the emergence of bio-regional Sustainable Energy Dollars are: (i) establish a stable unit of value not directly affected by governments, their central banks or alien markets; (ii) protect regional financial systems from contagion and improve their resilience; (iii) reduce the cost of finance and democratise its availability; (iv) improve the efficiency and equity of the financial system; (v) allow the creation of money to be controlled in each bio-region by mutually owned and controlled organisations rather than by governments or alien for-profit technology firms; (vi) establish market values, prices and costs to distribute the global population according to the carrying capacity of each bio-region; (vii) reduce market failure in allocating sustainable resources and mitigate the need for carbon taxing and/or trading.

Keywords: Complementary currency, E-money, Financial system, Financialization, Negative interest rate, Regulation

JEL Classification: E42, G01, G18

Suggested Citation

Turnbull, Shann, Could Regulation of Alternative Types of E-Money Reduce Systemic Risks and Costs? (May 7, 2013). Available at SSRN: or

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

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Sustainable Money Working Group ( email )

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New Garden City Alliance ( email )

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