By Olivier Ledoit
Using gold as money should be an option, not an obligation. Usage of money typically requires two parties, such as a buyer and a seller, or a saver and a banker. Whenever both parties agree to use gold as money, their right to do so must be legally protected. This is not the case right now. The US outlawed gold ownership and circulation in 1933, so it could happen to you anytime.
Switzerland has a project to amend the Constitution to protect those who wish to use gold as money. This is the “Gold Franc” project. It was launched last year by a Swiss citizen named Thomas Jacob. Mr. Jacob’s idea attracted a number of followers, who started to meet regularly, and eventually decided to found the “Gold Franc Association”. He managed to convince a group of parliamentarians from the largest party in Switzerland to deposit an initiative to institute the Gold Franc as a parallel currency to the paper Swiss Franc. This initiative is currently under review by the Economics and Taxation Committee. Parliamentary hearings are expected later in the year.
Salvare i nostri risparmi grazie al franco aureo
Una proposta per la Svizzera che insegna l'importanza della solidità della moneta
Negli ultimi mesi la Banca Nazionale Svizzera (BNS) è tra l'incudine dell'industria di esportazione costretta a languire sotto il peso del franco forte ed il martello della distruzione della nostra prestigiosa moneta, se continuasse sulla strada iniziata il 6 settembre che mira a tenere un cambio fisso di 1.20 CHF/EUR. Eppure già oggi avremmo una terza via a portata di mano, grazie ad un'iniziativa parlamentare depositata in primavera al Consiglio Nazionale: l'istituzione del franco aureo, una nuova moneta svizzera accanto al franco svizzero (CHF), che per praticità indicheremo qui con GFr (Goldfranken).
Working paper by Olivier Ledoit
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Abstract
In reaction to the monetary turmoil created by the financial crisis of September 2008, both legislative and constitutional reforms have been proposed in different Countries to introduce Commodity Money alongside existing National Fiat Currency. A thorough evaluation of the Economic consequences of these new proposals is warranted. This paper surveys some of the existing knowledge in Monetary and Financial Economics for the purpose of answering the significant Economic questions raised by these new political initiatives.
1 Introduction
Recently, political representatives of various Countries and States have introduced proposals to make Commodity Money coexist with Fiat Money within current Monetary Systems. In Malaysia, on August 12; 2010, Kelantan — a State of the Malaysian Federation — introduced the Gold Dinar and the Silver Dirham as parallel currencies alongside the Malaysian Ringgit. Similarly, in the US, on March 25; 2011, Utah Governor Gary Herbert signed into law a bill recognizing not one but two (Gold and Silver) Commodity Monies as legal tender for all transactions conducted within the State of Utah — in parallel with the U.S. Dollar. The bill legalizes currency competition in Utah as the Gold and Silver coins may be used, and accepted voluntarily, as an alternative to the Dollar. Within the U.S., a dozen other States are considering similar legislation. In Switzerland, on March 9; 2011, a National Councillor introduced in Parliament an initiative to institute the “Gold Franc”.
A partial text of this official proposal is translated hereunder:
The Case for Choice in Currency
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Choice in currency is being recognized as a fundamental right around the world. It is a human right on a par with the right to choose an employer and the right to choose a place to live because money, salary and geographical location are essential for (economic) survival. Today there are three concrete initiatives on three different continents to establish gold and silver coins as complements to existing national currencies:
1. Utah was the first State to make gold and silver coins legal tender alongside the U.S. dollar on March 25th, 2011. Utah now needs to work out how to overcome practical hurdles and start circulating gold and silver coins.
2. The State of Kelantan in the Federation of Malaysia was the first to mint gold and silver coins for the purpose of circulation on August 12th, 2010. Unlike Utah, Kelantan did not make gold and silver coins legal tender, but the Kelantan government sells 8,000 gold dinars and 30,000 silver dirhams to its citizens every month (see Pictures 1-2), and thousands of local businesses accept these coins as payment (see Picture 3).
