When considering moving towards a Free(r) Banking system in terms of enabling the genuine usage of multiple monies, the calls for such a system need not be done so in a way that is confrontational and hostile towards Central Banks. Instead, Central Banks can actually help facilitate the process by which society becomes accustomed to frequently using and reaping the benefits of multiple monies.
Specifically, introducing public-private partnership monies may be one way through which Central Banks can help facilitate the pathway to Free(r) Banking systems. Though I apply this conceptually to the case of the Bank of England in the UK, the reader will readily see that this principle can be applied to other Central Banks worldwide (such as the United States’ Federal Reserve system, the European Central Bank, the Bank of Japan, the People’s Bank of China, the Reserve Bank of India etc.).
Essentially, Central Banks do, contemporarily, have the most longstanding expertise in conducting monetary policy and, therefore, in striving towards a Free(r) Banking system, their expertise would be invaluable to ensure a smooth transition to a regime that functions effectively and efficiently with multiple monies.
Central Banks could help facilitate multiple monies through public-private partnerships
In the case of the Bank of England, the Bank of England could begin more significant, autonomous operations in regions and areas – for example, there could be a Bank of England (Yorkshire), a Bank of England (London), a Bank of England (Cornwall), Bank of England (Manchester) etc. and each of these new Banks could issue a Yorkshire, London, Cornish and Mancunian pound respectively.
The people of the UK could theoretically, for example, be free to use the Great British Pound but also the Yorkshire Pound, the London Pound, the Cornish Pound and the Mancunian Pound as it suits their diverse preferences (according to the prevailing exchange rates, interest rates, redemption potential etc.) and in which they could pay taxes according to the proportion in which their incomes are paid in these various currencies.
Additionally, the license to manage and influence these new monetary policies could be auctioned off to private firms and entities according, perhaps, to quotas (where a percentage is allotted to open competition, a percentage to local/domestic/international businesses, to local/domestic/international financial institutions, to local/domestic/international tech firms etc.).
Supposing that these public-private partnership monies were expected to propagate and be used in such a way that they make up even 20% of the British economy in (the UK economy, in 2015, was estimated to total $2.849 trillion by the IMF in nominal terms) then the rights to formal (partial) ownership of their monetary policies could potentially raise billions via auctions. Indeed, a variety of auction mechanisms can be designed to meet a variety of objectives (whether that be revenue-maximisation, ‘fair’ apportioning or otherwise). These new, more autonomous branches of the Central Bank could formally work with local councils rather than merely with Parliament and Her Majesty’s Treasury.
Working with the specificity of regions’ and industries’ objectives
Since the public-private partnership monies would likely see the Bank of England form new, more autonomous branches that work in tandem with local and regional governments, this would mean that the various monetary policies could be tailored more closely toward the specificity of interests of local and regional industries as well as agents more generally.
For example, there may be some regions that have a higher proportion of savers or who export more and, therefore, these regions may prefer their central bank branches to issue monies with relatively higher interest rates and relatively lower exchange rates, respectively. At the same time, peoples in these regions could trade in other regions’ monies and the national money if they so prefer since they would be able to pick and choose and allocate their portfolios accordingly with respect to their diverse preferences.
Greater devolution of power in monetary policy to peoples through cooperative agreements
Introducing regional and local public-private partnership monies that all agents can trade in, pay taxes in and so on alongside the usual GBP as well as the other public-private partnership monies (and potentially even wholly private monies if policy makers are convinced of their benefits) would align perfectly with the desire and trend toward devolution of powers to councils, assemblies and so on.
Central Bank branches being held accountable to more levels of government
Currently, the Bank of England is largely formally accountable to the Government and Parliament but also indirectly through media outlets, think tanks, academia etc.; however, devolution of powers to more autonomous, public-private partnership banking entities would also mean that fluctuations in exchange rates, interest rates, liquidity risk, credit risk etc. would be held more accountable to various levels of government as well as devolved administrations (such as Northern Ireland, Wales, and Scotland). Incidentally, these greater powers granted to devolved administrations may incentivise the Bank of England to undergo a ‘rebranding’ exercise of sorts to become a ‘Bank of Great Britain’ (for example).
Billions raised through auctions could be used for various tax cuts (council, income, corporation etc.)
As was mentioned in a previous article on the potential benefits of introducing public-private partnership monies (which also outlined the credit market benefits, its potential for alleviating unemployment and improving trade, amongst other things), there is the potential for billions to be raised by auctioning ownership of these monies. For example, suppose that, on a modest estimate (as was suggested in an earlier section of this article), the expected proportion of the volume of transactions and assets held in these new, multiple, public-private partnership monies are 20% of the economy in some future years.
This would correspond to exactly $0.5698 trillion ($569.8 billion); suppose further that private entities were willing to invest and, thereby, own up to 50% of the monies and that they valued this (again, on a very modest estimate) at 20% of expected proportion of transactions and assets in the economy in future years, this would correspond to around $113.96 billion raised through auctions (depending on how these auctions are designed and how convinced entities are by the efficacy of such ideas, of course).
This figure, however low or high it may be, could be earmarked for tax cuts of all sorts (council, income, corporation etc.) so, again, this would provide further incentive for various levels of government as well as private entities to cooperate with Central Banks in utilising their technical expertise to enable such a situation.
Concluding Remarks
Central Banks have an opportunity to work with rather than against the increasingly complex preferences of the populations’ welfare they are responsible for. Monetary stability, soundness and honesty can be achieved with their cooperation and the ideal of Free Banking systems with multiple monies does not necessitate for their wholesale abolition (which, given the precarious, global situation of uncertainty, is currently undesirable).
