currencies and banking


1.

consider money to be physical notes

for practical convienience, allocate totals that do not represent actual amounts of paper notes. 

print paper notes against these totals as required.





2.

bank account: the amount of money that the bank is due to return to the customer

bank loan account: the amount of money owed to the bank




3.

follow the following procedures



3a. creating money, initial reference


allocate a total, e.g. 1M.

print notes against this total

deliver the notes to social security recipients and employees as salary payments

record the number of notes on issue

replace paper notes with new ones on request, generally regularly as a banking procedure



3b. creating money, general reference


when funds are required to meet government payments or expand the money supply,

	a. increase the 'currency on issue' total by, say, 1M

	b. notify a bank that the federal government's account should be increased by 1M

	c. the bank may also record that 1M of notes are due to it by the currency issuer, on request.

	d. payments may then be made from this account to others as normal credit/debit trasfers



4.

banks should record

	a. the amount of money due to be given to it by the currency issuer as needed on request

	b. the amounts of money due to be repaid to customers (i.e. normal balances)

	c. amounts lent to customers


	cash deposit of x

		increase a by x

		increase b by x

	loan





note that the total bank account balances should approximately equal the 'currency on issue' 


