Shared Currency

[Andreas the Wise]

This has cropped up before (and I shot it down) but international currency exchange becomes more discussed, I return to the issue. In the end, Shireroth having a shared currency with other nations is not something for me to decide, but for everyone.

The issues with us sharing our erb with other nations are as follows:
1.Foreigners owning erb (currently illegal)
2.The potential for foreigners to mismanage erb, and them to make their way back into Landsraad and skew things (dual cit deceit). (Also foreign taxation)
3.The likelyhood for other countries erbs to end up back here just because we have the most shops (inflation).
4.How many erb to allocate to other nations, and the need to create more to address the needs of other nations.
5.Finally, that we'd then have to take them into account for currency exchange.

Now, I'll admit there are work arounds for each of these.
1. Change the law and allow it but make sure it doesn't influence voting (eg foreign accounts must be in Shirekeep). I'd actually like this anyway, for trading purposes.
2. Certainly nations with dual cits will NOT be allowed to give the dual cit extra currency in any initial hand-outs, and the dual-cit will need to keep the one account - that avoids people amassing huge fortunes in other countries. But we also would need to set basic fiscal standards.
3. That's a serious problem and would probably bring inflation. However, in fairness, our economy already fluctuates 10 000 erb (from tax to just before next tax) and it doesn't seem to have messed with our prices much. But depending on how many people use erb, if we keep creating stuff for new people some of it will find its way here.
4. At a rough estimate, 2000 per active non-dual cit for initial distribution, and 2-5 thousand for government.
5. Others might have missed this point ... but if the discussions already going ahead about some sort of ICEO-esque formula for basic currency exchange rates (which would then fluctuate in the free market), we'd have to take into account other nations in our calculations, in fairness. Otherwise, they might end up with a different exchange rate to us with other nations and strange things happening ...

Now, after saying that, with a lot of work, it might be possible, let me also add - we don't have to. There are plenty of good reasons that Shireroth of all nations should persist with its own currency, but we should perhaps try and get similiar currency for other commonwealth members. But that will make it (somewhat) harder for them to interact with us as they won't be able to just buy, we'll have to go through currency exchange dealers first. So yeah .... discuss.

[Erik Mortis]

Don't forget the bank software. It makes it more complicated.

[Andreas the Wise]

That too.

Can I note that we can have a unified economic system (if I understand the phrase correctly) - that is, get other nations to have a similiar vote-based economy, share the bank etc ... without sharing currency. Having a lot of people with similar starting currency positions would make it a ton easier to organise exchange equations.

[Scott of Hyperborea]

I still think the best way to set an exchange rate is to let the market decide.

So, for example, Shireroth has erb and Babkha has rial. Any Babkhan person can sell their rial to a Shirerithian, either for Shirerithian goods, or for Shirerithian erb. The Shireroth government can also buy rial for erb to create a foreign reserve or to encourage foreign trading in Shireroth. They'll set the price for each transaction - for example, if Babkha's doing really badly, they might demand ten rial to the erb, but if Babkha's doing very well, they might offer ten erb for a rial. If the government thinks Babkhans are getting too many erb, they can raise their prices, or buy back erb using their rial.

Anything else has too much potential for gaming the system, and leading to a general economic collapse if one country doesn't have their act together.

I also think it would be interesting to let foreigners use their erb in Landsraad votes. Not directly, of course. But if someone wanted to start a "bank" in Brookshire, such that any foreigner who supported Brookshire's position on an issue could send their money there temporarily (for a fee), that would be fair. Sure, it would give foreigners some level of control over our government. But that's not too different from the real world - America and Saudi Arabia both influence each other's policies pretty strongly because of their economic ties. And if the MiniTrade thought it was getting out of hand, they could ban further sale of erb to Babkhans. Maybe we could even tax foreigners at a higher rate and make a profit off of it.

[Kaiser Loki III]

Why do you always sound so reasonable?

[Andreas the Wise]

So Scott, you're proposing we scrap the "no foreigners holding erb" rule and allow us to sell them erb for exchange purposes.

Sounds good to me.

[Erik Mortis]

I think what I meant by joint Economy is just having a connection point between economies of the various nations, ie. exchanges. perhaps we a single bank system that can handle differnt currencies.

Joint currency would be the use of a single interchanging currency in a single bank.

[Andreas the Wise]

Ok, sounds good.

[Erik Mortis]

It seems a bit more manageable to me.

[Andreas the Wise]

Certainly.