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The Impex Dollar

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on 6/29/20, 8:44 AM 172 views

The Impex Dollar   

A second Australian currency created for the regulation of A$/foreign currency exchanges

THE IMPEX DOLLAR

The Impex Dollar enables the following:

1.             An automatic self-balancing of a nation’s balance of payments.

2.             The full regulation, as desired, of our foreign exchange market, so as:

(a)          to proscribe any sale of an Australian asset which is not desired,

(b)          to proscribe any purchase of foreign assets which are not desired,

(c)           to identify details of any and all A$/foreign currency exchanges. (The small value ones through requiring those trading on behalf of others, to record the value, purpose and identity of each of their aggregated sales and purchases, as a precondition of their registration as “Aggregating Agents” licensed to trade on another’s behalf.)

(d)          and to enable any other regulation which may be desired in the national interest, on the basis of information becoming available through (c) above, or from other sources.

This might include:-

(i)             designating corporations with related companies operating overseas as “Multinational Impex Traders”. (M.I.T’s), and registering them as such.

(ii)            in response to a widespread practice of M.I.Ts inflating foreign input costs and interest, and undervaluing outgoing product to minimise Australian income tax, greater documentation as to the purpose for their transactions might be required and/or a higher rate of Impex transaction tax might apply.

3.             The prevention of any increase in Australia’s indebtedness in foreign currencies. All future foreign debt would only be acceptable if written in Impex Australian dollars.

4.             A means of acquiring the foreign exchange necessary to repay present foreign debt expressed in foreign currencies.

5.             The restoration of Australia’s sovereignty in its external economic relationships.

6. Australian independence from external pressures, currently inhibiting internal reform. (For example, in order to attract sufficient foreign funds to finance our balance of payments deficit, interest rates are often maintained at a level so high as to damage the internal economy.)

A concise outline

All borrowings or purchases of foreign currencies by Australian nationals or companies operating in Australia would be legislated as illegal and banned, except through an intermediary currency; the Impex Australian Dollar.

All exchange between Australian and foreign currencies would be via a special second Australian currency (An Impex $, i.e. an import-export $) which could be freely bought and sold to facilitate approved foreign exchanges.

Foreigners wishing to acquire A$s, whether for exports, or investment in Australia or for making loans into Australia, would be forced to buy Impex A$, and exchange the I.A$s to an Australian entity or citizen to effect the business.

Australians wishing to acquire foreign exchange, for whatever reason, imports, external investment or foreign loans or their repayment, would be forced to buy Impex A$, and exchange the I.A. $s to foreign nationals.

A market for I.A$s would be established in Australia, and no other sales or purchases would be recognised as valid. A register would be maintained of all holdings, and sellers and purchasers in all transactions.

This establishes several things:

(a)          The game is under our control and regulation.

(b)          The issue of I.A$s is the province and preserve of Australian Government sanctions.

(c)           Our dealings with others are self-balancing, and debt is impossible in foreign currencies.

(d)          The benefit of creating this money (i.e. of issuing these I.A$s) accrues to the Australian regulatory authority. Foreign currency, equivalent in value to the total volume of I.A$s in existence, plus 2% per transaction, is almost costlessly acquired.

(e)          Exporters would be paid in I.A$s only, and would have to sell these to acquire A$. Importers would have to buy I.A$s, and pass these to foreign nationals to effect transactions.

(f)            There are different types of changes of ownership of I.A$s:

(f1) Sales of I.A$s between Australian nationals (exporters to importers) for A$.

(f2) Sales of I.A$s between foreign nationals (providers of imports to buyers of exports) for foreign currencies.

(f3) Exchanges each way in I.A$s only, between Australian nationals and foreign nationals, in exchange for goods, services, loans etc.

From the above (a) to (f) a whole range of options for regulation appear:

(I)        Any sale of I.A$s for currency (A$ or foreign) must be followed by an

exchange for a specified non-monetary consideration, across the internal /external barrier. That is, a foreign buyer must exchange them to an Australian entity, or vice versa, after the purchase of the I.A$s.

(ii)            Only after an exchange for a non-monetary consideration, e.g. exports/imports, foreign loans/borrowings, (mortgage papers), asset sales or tourist settlements which are specified, can the new owner return to the market to dispose of I.A$s. Paperwork and proof or evidence of real transactions would be required. After an exchange as above, an on-market sale only is permissible.

(iii)          Brokerage could be levied on sales of an (f1) or (f2) nature, yielding both or either A$ or foreign currency (preferably the latter) depending upon fee structures.

All exporters, sellers of Australian assets, providers of incoming tourist services or receivers of foreign loans (call them exporters) would receive I.A$s via an exchange.

All importers would buy their I.A$s from the above.

All foreign suppliers of imports would receive I.A$ in exchange, and all buyers of our exports would buy their I.A$s from them.

The best point of issue for new or additional I.AS’s, would appear to be through sales to buyers for foreign exchange, i.e. buyers of “exports”. This would make the Australian (or any other National) Reserve Bank foreign exchange rich.

 

The only imports that would be possible, would be had through buying I.A$’s already held by Australians. What came in would put an upper limit to what could go out.

Importers would exchange them (ie. I.A$’s) to foreigners, not sell them.

The foreign suppliers of imports would sell them to buyers of our exports, but the market and register of holders would be within Australia’s jurisdiction, and taxes and charges would be levied.

Apart from brokerage, a 1 or 2% tax might be levied on these foreign sales as a “sinking fund” to redeem I.A$s if needs be. In reality, this would not often happen, rather the inflation of the Impex currency would probably be the norm, and foreign currency would flow in to the reserve Bank and government. The longer the time that owners of I.A.$s held them, the more could be issued for foreign exchange.

Receipts of foreign exchange from the newly issued I.A$ and the 2% tax would be put into trust, earning interest from foreign banks, until required to repay presently existing foreign currency national debt. Thereafter it might be used for foreign policy expenses.

A tax might also be levied upon Australian “importers” purchases of I.A$s from “exporters”, levied in Impex $s which might be cancelled out, leaving an ever recurring opportunity to reflate the Impex currency, or not, as desired, and would yield foreign currency when reflated.

Registered brokers on the Australian Stock Exchange could administer this system for brokerage, using links with overseas broking houses to facilitate foreign customer contact. Brokerage levied on sales between foreign nationals would be in the currency of the sale, with the foreign funds earned by Australian brokers being sold to the Reserve Bank for A$. Brokerage on sales between Australian nationals could be in I.A$, which would be surrendered to the Reserve Bank in exchange for A$, at the I.A$ to A$ exchange rate of the sale.

The Chess system of registering shares could be used to hold balances. In a sense there would be four types of I.A$s, numbered I.A$s No1; No 2; No. 3; and No. 4.

Those issued originally to purchasers of Australian exports, would be designated Number 1 Type of Impex A$. These could only be transferred to Australian nationals for a revealed purpose, in whose hands they would be designated I.A.$, Number Two Type. Number Two I.A$ could only be sold on-market to other Australian nationals (this term includes foreign owned companies active in Australia), in whose hands they would be designated Number Three Type of I.A$.

Number Three Type I.A$ could only be exchanged to foreign nationals for a revealed purpose, in whose hands they would be designated Number Four Type I.A$.

Number Four I.A$ could only be sold on-market to other foreign nationals, at which point they become Number One Type again.

If brokerage is 1%, and tax is 2%, then on each circuit, the government receives:

 

On Number Four to Number One transactions

2% tax in straight foreign exchange.

1% Brokerage (less commissions to foreign brokers), say ½% foreign exchange to be purchased from Australian brokers for A$.

On Number Two to Number Three transactions

2% tax in I.A$ which are cancelled out (but can be reissued for foreign exchange). 

1% Brokerage in I.A$ purchased from brokers for A$. Again, these are cancelled out, but others can be issued for foreign exchange.

Number One to Number Twoand

Number Three to Number Fourexchanges are free.

If the volume of I.A$ is maintained constant, then about 5.5% is gained in foreign exchange, with approximately 1.5% of this being purchased from brokers for A$s, for each circuit of the system.

If the volume of I.A$s is increased, this is a net gain in foreign exchange. If the volume if I.A$ is decreased, this is not a net loss of foreign exchange to the extent of the decrease, as I.A$ would be purchased with A$, and then withdrawn from circulation.

The expansion or contraction of the volume of the I.A$ supply might be regulated so as to influence the market to trade at one I.A$ to A$1.03 (1:1 net after brokerage and tax) to within an acceptable plus or minus % variation, if desired.

So much for the current fable that a government cannot regulate currency markets.

The only way that it can be broken is by foreign governments preventing their nationals from buying I.A$, but if any credible foreign government remained in the market, then all could purchase that currency and then buy.

 

 

APPENDIX I 

MEETING FOREIGN DEBT OBLIGATIONS

Any temporary shortfall in foreign currency needed to retire debt in foreign currencies falling due, might be handled in a variety of ways:

(a)           Creating and selling additional I.A$ for foreign currency, and depending upon the impact of this upon the A$ value of the Impex dollar, buying them back, as necessary, for A$.

(b)          Buying I.A$ and selling them for foreign currency.

(c)           Increasing the tax on transactions; preferably on M.I.Ts which pay little income tax.

(d)           Renegotiating, as a last resort, and where possible, loans in foreign currency into Impex dollars.

The action described in (b) above, i.e. buying Impex dollars for A$s and selling them for foreign currency, both increases returns for Australian exporters by bidding up the value of their I.A$, and increases the cost of imports by selling down the Impex $’s value in foreign currency.

Importers both pay more for their Impex dollars, and their suppliers receive less foreign currency for them. Once these changed values are taken into account, the pressure for import replacement becomes intense.

Our national debt repayment is automatically accommodated, through changed terms of trade, into the market place.

The impact of the action described in (a) above (i.e. creating and selling

I.A$ for foreign currency and buying some of them back for A$) has the same relative impact upon importers, (through a greater depression of the foreign exchange value of their I.A$) whilst maintaining the same profitability for exporters.

The action (c) above (imposing a higher tax on Multinational Impex Traders [M.I.Ts] because they are able to pay company tax on only a voluntary basis, if at all) would have a favourable impact upon the competitiveness of genuinely Australian business.

It could not, however, raise very large sums quickly, so would need to be imposed well in advance of upcoming commitments to repay foreign currency debt.

The action (d) above (converting foreign currency debts into I.A$) is probably best avoided. There is no point in instituting the Impex system, if it is not to be exploited in the interests of national equity in national assets, and long term national solvency. It will probably be unnecessary, however, given that our national debt of some $200 billion (now a very dated figure) falls due, in various sums, over the next thirty years.

Through maintaining at least three years’ requirements for foreign currency in advance of it being needed, little disturbance on a day to day basis will be compelled upon us.

The sale of the whole initial volume of Impex dollars for foreign currency will contribute to these reserves. To avoid the appearance of this a substantial number of Number 2 Impex dollars might initially be created for day one of operations, and then be  repurchased in the coming weeks.

RESEARCH REQUIREMENTS

In order to achieve progress towards the Impex dollar as an understood and quantified option, several research matters remain outstanding:

1.            Calculate the flow

Calculations from existing data, as to likely daily market requirements for I.A$ to facilitate expected transactions.

2.            Determining the “bucket” size

The volume of I.A$ that will need to be created to achieve a given I.A$ to A$ value, will be effected by the administrative procedure times needed for transfers and settlements, (if any, now given a computerised world), the propensity of holders of I.A$s to delay their disposal of them, as well, of course, as by “flow rates”.

3.            Revenue Receipts

Estimations are needed of likely revenue available from an Impex transaction tax imposed at various rates, and perhaps upon different classes of traders. What percentage of transactions could be expected from M.I.Ts?

SHARING IN THE BENEFITS OF OWNINGTHE INTERNATIONAL CURRENCY

A little recognised benefit now accruing to the United States (and previously to Great Britain) involves the use of its currency as the “international currency”.

If the value of U.S. $s held by other nationals, for purposes of acting as a universal currency, amounts to U.S.$X billion, then the U.S. has benefit of whatever was bought for this U.S. $X billion, without any current demand upon the U.S. being exercised in return.

This greatly assists the strong currency issuers of the world towards owning the world. The U.S. owns U.S. $X billion worth of assets for which it has currently paid nothing (except potentially sometime if we stop needing their currency).

A share in this benefit is available to any nation with an Impex system. The share of each would be proportional to its trade as a percentage of world trade.

RECAPPING

The Impex Dollar enables the following:

1.            An automatic self-balancing of a nation’s balance of payments.
2.            The full regulation, as desired, of our foreign exchange market, so as:

(a)          to proscribe any sale of an Australian asset which is not desired,

(b)          to proscribe any purchase of foreign assets which are not desired,

(c)           to identify details of any and all A$/foreign currency exchanges. (The small value ones through requiring those trading on behalf of others, to record the value, purpose and identity of each of their aggregated sales and purchases, as a precondition of their registration as “Aggregating Agents” licensed to trade on another’s behalf.)

(d)          and to enable any other regulation which may be desired in the national interest, on the basis of information becoming available through (c) above, or from other sources.

This might include:-

(i)            designating corporations with related companies operating overseas as “Multinational Impex Traders”. (M.I.T’s), and registering them as such.

(ii)           in response to a widespread practice of M.I.Ts inflating

foreign input costs and interest, and undervaluing outgoing

product to minimise Australian income tax, greater

documentation as to the purpose for their transactions might be required and/or a higher rate of Impex transaction tax might apply.

 

3.            The prevention of any increase in Australia’s indebtedness in foreign currencies. All future foreign debt would only be acceptable if written in Impex Australian dollars.

4.            A means of acquiring the foreign exchange necessary to repay present foreign debt expressed in foreign currencies.

5.            The restoration of Australia’s sovereignty in its external economic relationships.

6.            Australian independence from external pressures, currently inhibiting internal reform. (For example, in order to attract sufficient foreign funds to finance our balance of payments deficit, interest rates are often maintained at a level so high as to damage the internal economy.)

 

 

Variation

 

The model presented here has been used to demonstrate possibilities, and may be varied in many ways to suit particular applications. The 2% tax might not be applied, Multinational Corporations might not be singled out for the imposition of special conditions, and the relative value of the two currencies might not be kept at parity, and so on.

 

This document was originally written in 1997. It was not been published, and throughout its existence has only been shared with four persons on a confidential basis. During 2016 it is the intention of the author to share it with only one financial institution, and depending upon the response, may not be made available to any others subsequently. The authors identity is being withheld pending that response.

 

During mid-2020 the decision to make this document widely available was made and acted upon.

 

 

 

—ooOoo---

 

 


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Asked: 6/29/20, 8:44 AM
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Last updated: 7/1/20, 8:05 AM