9 Jul 2015

N-Euros are Go!!

I've been pushing the idea of a parallel debt-free Euro, called the N-Euro (New Euro, or National Euro) for a couple of years now. I had the original Eureka moment at 4am on the 17th September 2012. I followed that up with another post when I generated a 13 minute Youtube presentation.

Very recently, I have been suggesting that N-Euros might be a solution for the Greeks.

The idea is that governments could decide to pay some proportion (say 50%) of all public sector salaries, pensions and other benefits using this alternative currency - thus avoiding the need to borrow more classic euros from the Commercial Banking system, or being forced to accept intolerable conditions for getting help from the European Central Bank. They would guarantee that the new currency had value by accepting them for paying taxes or other charges.

So, to help get the ball rolling, I've done quite a bit of the work for them by setting up a basic N-Euro framework using Cyclos 4 - a free banking system developed by the STRO (Social Trading Organisation).

You can actually try the system out by going to http://www.n-euro.com where you will be greeted by the following welcome page. I hope you like it.

For the time being, there's not much you can do with it. Feel free to register, but you will find yourself with an N-Euro account credited with precisely 0 N-Euros. And you can't send anything to anybody.

To get the system off the ground, I'm looking for any administration somewhere in the Eurozone who would like to try it out. Essentially, it would be some sort of organisation (a local council, a municipality, a regional government, or who knows, maybe Alexis Tsipras!) that currently
a) pays citizens salaries, pensions or benefits in Euros
b) collects some form of tax or charges

Suppose you are the head of a local government that charges businesses and resisdents taxes. If you agree that you will accept N-Euros in payment for those taxes instead of conventional Euros, then you are ready to go!

From that point, you could decide to pay some proportion of salaries or benefits using N-Euros, which would immediately save you money, because you wouldn't need to have that money available.

Clearly, you will also need to be able to set up accounts for as many citizens and businesses as possible in your locality. This should be easy for people that are currently on your payroll or receiving benefits, but it would be even more useful if you could get other people to join in too.

Suppose that you managed to get everyone in your city to sign up - citizens and businesses. N-Euros would enter the system via the N-Euro accounts of people working for the local authority. But they could then be used to make payments to other local businesses, who would very probably be happy to take them instead of conventional Euros because they know that they are worth 1 euro each, and can be used to pay taxes.

That really is all you need to establish parity between N-Euros and Euros! Simple!

There are plenty of advantages of using this Cyclos-based N-Euro system.
  1. It's totally free to run! People will be able to pay the bill in a restaurant with no cost at all. If you are the restaurant owner, would you prefer N-Euros (which have no transaction costs) or conventional Euros paid for with a credit card, and where VISA will charge you 3-4% for handling the transaction. The people at Cyclos already have versions that run on iPhones, iPads and Android devices. You can make payments by SMS, and they are introducing PoS (Point of Sale) systems too.
  2. There is no possibility of cheating. If someone does not have enough N-Euros on their account to make the payment, it simply won't go through (because I've set the system up so that negative values are not permitted).
  3. For the local authority, N-Euros can be produced for free! Obviously, there have to be controls over what can be paid for using the N-Euros. I think that you  would need to have some sort of elected body to check that all the N-Euros generated by the Authority were justified. This would be the case if they were used to pay part of the salary of people working for the Authority. Any payment that would not be approved the committee could be made illegal.
  4. Since the authority can control both the creation of N-Euros (via payments made to citizens) and their withdrawal (by paying taxes), it would easy for them to control the total quantity of N-Euros in circulation. If at any point it was felt that there were too many N-Euros in the system, it would be very easy to add a financial transaction tax that would remove a small percentage every time a payment was made.
  5. There is abolutely no need for paper N-Euros or coins. Everything is entirely handled by the software. Indeed the only place they can exist is in the database of the computer. They cannot be moved to offshore taxhavens, or hidden under mattresses.  
  6. They cannot be used for illegal activity. Since there would be a public record of every N-Euro payment, you would be very foolish to try and organise anything criminal using N-Euros. Obviously, only people with administrator status would normally be in a position to find out about specific transactions, which should provide sufficient confidentiality for most people. If anyone really needed to guarantee confidentiality, they should use some other payment mechanism (like paying cash in conventional Euros).
Could the system be built up from small local implementations? I believe the answer is yes.

Let's suppose that one or two different local authorities decided to use the N-Euro system. In the initial stages, we could set them up internally with two different currencies that were kept separate. There might be one N€ for Toulouse (my local city) which might be called the N€Toul, and a separate one for Bordeaux (a city about 150 km away) which might be called the N€Bord. Initially, people in Bordeaux and Toulouse would not normally be able to make payments to people in the other city. However, once the systems were functioning well, the two cities could decide to merge the two currencies together.

Do this process of creation and merger enough times, and you might end up with an N-Euro that worked everywhere within the Eurozone!

Could it work? Well, I suspect that there's only one way to find out. We need to start trying it out - and the sooner the better.

If there are people who are interested in getting involved, feel free to contact me. I'll probably set up a BaseCamp project for discussing the proposal.

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