58 Pages Posted: 12 Apr 2017 Last revised: 18 Apr 2017
Date Written: April 17, 2017
This paper outlines the technology of cryptocurrencies, avoiding misleading analogy with notes and coin. It then proposes using this technology to move both bank money and money-financed bank loans off balance sheet onto a single shared cryptocurrency ledger, together with government issued fiat money. This stops bank failures disrupting money and payments and hence helps achieve monetary outcomes desired by the Austrian school of economics: reducing excessive state interference in the market for credit (through bank regulation, lender of last resort and bail-out) and discouraging unsustainable money and credit expansions (leading to financial crisis and depression).
Keywords: 100-percent reserved banking, bank payments, bank reserves, Bitcoin, blockchain, central counterparties, the Chicago plan, clearing and settlement, credit money, cryptography, commodity money, digital currency, distributed ledgers, electronic currency, fiat money, fiduciary media
JEL Classification: B53, E42, G21
Suggested Citation: Suggested Citation