Sovereign Money Act of 2019

AN ACT To restore the authority of Congress and the Federal Government to create and regulate money, modernize and provide stability for the monetary system of the United States, to retire public debt, to eliminate the federal deficit; and for other public purposes.

August 12, 2019

Be it enacted by the Senate and the House of Representatives of WTP in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the “Sovereign Money Act of 2019.”

SEC. 2. STATEMENT OF PURPOSE.
The purpose of this Act shall be to restore the authority of Congress and the Federal Government to create and regulate money, modernize and provide stability for the monetary system of the United States, to retire public debt, to eliminate the federal deficit; and for other public purposes.

SEC. 3. TABLE OF CONTENTS
Section 1. Short Title.
Section 2. Statement of Purpose.
Sec. 3. Table of Contents

## Table of Contents

TITLE I—ORIGINATION OF UNITED STATES MONEY

Sec. 101. Exercise of Constitutional Authority to Create Money.

Sec. 102. Unlawful for Persons to Create Money.

Sec. 103. Production of United States Money.

Sec. 104. Legal Tender.

Sec. 105. Disbursements to be Denominated in United States Money.

Sec. 106. Origination in Lieu of Borrowing.

Sec. 107. Retirement of Instruments of Indebtedness.

Sec. 108. Accounting.

TITLE II—ENTRY OF UNITED STATES MONEY INTO CIRCULATION

Sec. 201. Entry of United States Money Into Circulation.

TITLE III—UPDATING THE FEDERAL RESERVE SYSTEM

Sec. 301. General Updates to the Federal Reserve System.

Sec. 302. Establishment of the Bureau of the Federal Reserve.

Sec. 303. Savings Provisions and Transfer Provisions.

TITLE IV—TRANSITIONAL ARRANGEMENTS

Sec. 401. Conversion of Federal Reserve Notes.

Sec. 402. Replacing Fractional Reserve Banking with the Lending of United States Money.

Sec. 403. Bureau of the Federal Reserve.

TITLE V—AUTHORITY OF FDIC

Sec. 501. Authority of FDIC.

## TITLE I—ORIGINATION OF UNITED STATES MONEY

SECTION. 101. EXERCISE OF CONSTITUTIONAL AUTHORITY TO CREATE MONEY.

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In General.—Pursuant to the exercise by the Congress of the authority contained in the 5th clause of section 8 of Article I of the Constitution of the United States of America—

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the authority to create money within the United States shall hereafter reside exclusively with the Federal Government; and

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the money so created shall be known as United States Money and denominated and expressed as provided in section 5101 of title 31, United States Code.

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Exercise Of Sovereign Power.—The creation of United States Money under this Act is the legal expression of the sovereign power of the Nation and confers upon its bearer an unconditional means of payment.
Limitation On Expression.—Beginning on the enactment date—
only the coin, notes, or other forms of legal tender, including electronic currency, originated by the Department of Finance and Labor under the authority of this Act unless otherwise provided in this Act shall be deemed as United States money; and
it shall be unlawful for any person to designate any credit, note, bond, script or other financial instrument as United States Money.

SEC. 102. UNLAWFUL FOR PERSONS TO CREATE MONEY.
Any person who creates or originates United States money by lending against deposits, through so-called fractional reserve banking, or by any other means shall be fined under title 18, United States Code, imprisoned for not more than 5 years, or both.

SEC. 103. PRODUCTION OF UNITED STATES MONEY.
Commencing Full Production Of United States Currency.—Section 5115 of title 31, United States Code, is amended by striking subsections (a) and (b) and inserting the following new subsections:

“(a) In General.—In order to furnish suitable notes for circulation as United States money, the Secretary of Finance and Labor shall cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent alterations, and shall have printed therefrom and numbered such quantities of such notes of the same denominations as are currently issued.
“(b) Form And Tenor.—United States currency notes for circulation as United States money shall be in form and tenor as directed by the Secretary of Finance and Labor.”.

Ceasing Production Of Federal Reserve Notes.—The Secretary of Finance and Labor shall wind-down and cease production of Federal reserve notes under the 8th undesignated paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 418) as quickly as practicable after the date of the enactment of this Act, in coordination with the start-up and maintenance of production of United States currency under section 5115 of title 31, United States Code. The Secretary of Finance and Labor shall ensure that at all times the amount of Federal Reserve notes in circulation is sufficient to meet demand until the production of United States currency is sufficient to meet such demand.
Continuing Circulation Until Retirement.—Any Federal Reserve notes in circulation shall continue to be legal tender until retired in accordance with applicable provisions of law.

SEC. 104. LEGAL TENDER.
In General.—United States Money shall enter into general domestic circulation as full legal tender in payment of all debts public and private.
Technical And Conforming Amendment.—Section 5103 of title 31, United States Code, is amended by striking “(including Federal reserve notes and circulating notes of Federal reserve banks and national banks)” and inserting “in the form of United States Money”.

SEC. 105. DISBURSEMENTS TO BE DENOMINATED IN UNITED STATES MONEY.
On the enactment date, all United States Government disbursements shall be denominated in United States Money, the unit being the dollar, symbolized as $.

SEC. 106. ORIGINATION IN LIEU OF BORROWING.
In General.—After the enactment date, and subject to limitations established by the United States Federal Reserve under provisions of section 302, the Secretary of Finance and Labor shall originate United States Money to address any negative fund balances resulting from a shortfall in available Government receipts to fund Government appropriations authorized by Congress under law.
Prohibition On Government Borrowing.—After the enactment date, unless otherwise provided by an Act of the Congress enacted after such date—
no amount may be borrowed by the Secretary of Finance and Labor from any source; and
no amount may be borrowed by any Federal agency or department, any independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, Federal savings association, or Federal credit union) from any source other than the Secretary of Finance and Labor.
Rule Of Construction.—No provision of this Act shall be construed as preventing the Congress from exercising its constitutional authority to borrow money on the full faith and credit of the United States.
Technical And Conforming Amendment.—Chapter 31 of title 31, United States Code, is hereby repealed, subject to the retirement of outstanding instruments of indebtedness of the United States in accordance with section 401.

SEC. 107. RETIREMENT OF INSTRUMENTS OF INDEBTEDNESS.
The Secretary of Finance and Labor shall commence to retire all outstanding instruments of indebtedness of the United States by payment in full of the amount legally due the bearer in United States Money, as such amounts become due.

SEC. 108. ACCOUNTING.
In General.—The Secretary of Finance and Labor shall account for the disbursement of United States Money and of current fund balances through accounting reports maintained and published by the Secretary of Finance and Labor and by departments and agencies of the United States Government.
GAO Audit.—The Comptroller General of the United States shall conduct an independent biennial audit.

## TITLE II—ENTRY OF UNITED STATES MONEY INTO CIRCULATION

SECTION. 201. ENTRY OF UNITED STATES MONEY INTO CIRCULATION.
The Secretary of Finance and Labor shall cause United States Money to enter into circulation by and through any of the following means:
Any origination or disbursement of funds to accomplish Federal expenditures authorized and appropriated by an Act of the Congress.
Any disbursement to retire outstanding instruments of indebtedness of the Federal Government or the Secretary of Finance and Labor as such instruments become due.
Any contribution authorized by an Act of the Congress subject to any limitation established by the Federal Reserve to the Revolving Fund established in section 302 of this Act.
Any action provided for in the transitional arrangements specified in title IV of this Act, including the conversion of all deposits in transaction accounts into United States Money.
Any other means, and for any other purpose explicitly authorized by an Act of the Congress that becomes law after enactment.

## TITLE III—UPDATING THE FEDERAL RESERVE SYSTEM

SECTION. 301. GENERAL UPDATES TO THE FEDERAL RESERVE SYSTEM.
Duties.—The Federal Reserve, in addition to its existing duties, shall—
establish monetary supply policy and monitor the Nation’s monetary status; and
carry out such other responsibilities as the President may delegate to the Federal Reserve or that may be provided by an Act of Congress.
Governing Principle of the Federal Reserve.—The Federal Reserve shall pursue a monetary policy based on the governing principle that the supply of money in circulation should not become inflationary nor deflationary in and of itself, but will be sufficient to allow goods and services to move freely in trade in a balanced manner. The Federal Reserve shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.
Responsibility Of Secretary of Finance and Labor.—The Secretary of Finance and Labor shall regulate the monetary supply in reasonable accordance with targets established by the Federal Reserve.

SEC. 302. ESTABLISHMENT OF THE BUREAU OF THE FEDERAL RESERVE.
Establishment.—There is hereby established the Bureau of the Federal Reserve as a bureau within the Department of Finance Labor (hereafter in this section referred to as the ‘Bureau’).
Management.—
Commissioner.—The management of the Bureau shall be vested in a Commissioner who, with the assistance of the Deputy Commissioner and such staff as the Commissioner may appoint, shall carry out the duties vested in the Bureau and the Commissioner.
Deputy Commissioner.—There is hereby established within the Bureau the position of Deputy Commissioner.
Appointment.—The Commissioner and the Deputy Commissioner shall be appointed by the president, by and with the advice and consent of the Senate.
Terms.—
In General.—The Commissioner and the Deputy Commissioner shall each be appointed to a term of one month.
Vacancy.—
In General.—Any vacancy on the Bureau shall be filled in the manner in which the original appointment was made.
Interim Appointments.—Any member appointed to fill a vacancy occurring before the expiration of the term for which such member’s predecessor was appointed shall be appointed only for the remainder of such term.
Duties.—
Monetary Policy.—The Bureau shall—
administer, under the direction of the Secretary of Finance and Labor, the origination and entry into circulation of United States Money, subject to the limitations established by the Federal Reserve; and
administer lending of United States Money to authorized depository institutions, as described in section 403 (‘Revolving Fund’) to ensure that—
(i) money creation is solely a function of the United States Government; and
(ii) fractional reserve lending is ended.

## TITLE IV—TRANSITIONAL ARRANGEMENTS

SECTION. 401. CONVERSION OF FEDERAL RESERVE NOTES.
In General.—The Secretary of the Finance and Labor shall establish the rules and procedures for converting outstanding Federal reserve notes to United States Money of equal face value.
Provision Of Supply Sufficient For Conversion And Issuance.—The Secretary of Finance and Labor shall begin providing a sufficient quantity of United States Money to the domestic banking system to allow for conversion of all outstanding Federal reserve notes and the issuance of additional currency as required.
Disbursal Of Funds.—After the end of the 180-day period beginning on the date of the enactment of this Act, all financial institutions within the United States shall only disburse funds in United States Money, whether as currency, an addition to an available account balance, or other instrument.
Disposal Of Obsolete Currency.—The Secretary of Finance and Labor shall promptly dispose of (in the manner provided under section 5120(b) of title 31, United States Code, for the disposal of obsolete United States currency) all Federal reserve notes as they are returned in exchange for United States Money.

SEC. 402. REPLACING FRACTIONAL RESERVE BANKING WITH THE LENDING OF UNITED STATES MONEY.
Conversion Process.—
Deposits.—

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In General.—All deposits at any depository institution shall be designated as and treated as United States Money (either cash or an electronic equivalent) and as transaction accounts.

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Prohibitions.—In addition to subsection (d), the following provisions shall apply with respect to United States Money on deposit in a transaction account at any depository institution:
(i) Interest.—No interest may be paid or may accrue on any United States Money on deposit in a transaction account at any depository institution.
(ii) Deposits as Bailment.—Any United States Money on deposit in a transaction account at any depository institution shall—
(I) be treated as a bailment for the mutual benefit of the parties and terminable at will; and
(II) as property held in trust as bailed property, not be treated as an asset of the depository institution or as a source of credit.
Exception for Long-Term Savings Not Subject to Deposit Insurance.—
(i) In General.—Subparagraph (B) shall not apply to any liability of depository institution to a customer for any amount in an account at the depository institution pursuant to a contract that restricts the availability of any such amount for a fixed term and does not permit amounts to be transferred in any manner for the benefit of a third party.
(ii) Fixed-Term Savings Not Insured.—Any account described in clause (i) may not be treated as a deposit, for purposes of the Federal Deposit Insurance Act, or as a share draft account, for purposes of the Federal Credit Union Act.
Outstanding Credit.—Any asset of a depository institution that results from credit extended against, is attributable to, or has been accounted for with respect to, amounts described in paragraph (1)(A) shall, on the enactment date—

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be a liability of the depository institution to the Federal Government; and

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as the outstanding balance is repaid pursuant to its terms, shall be paid over to the Federal Government.
Deposit in Revolving Fund.—The monies paid to the Federal Government shall be deposited into the Revolving Account established in section 403.

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In General.—Subject to the requirements of this section, the Federal Reserve shall establish and publish the accounting rules, pricing, and processes which will convert all bank credit in circulation as of the date of such conversion, into United States legal tender money.

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Retention of Interest Payments.—A depository institution may keep as income, any interest payment made by a customer to a depository institution on an outstanding loan for which the depository institution became indebted to the Federal Government under paragraph (2).
Treatment Of Amounts On Reserve At A Federal Reserve Bank.—The Federal Reserve shall determine how the reserves of a depository institution at a Federal reserve bank pursuant to section 19 of the Federal Reserve Act shall be treated, so as to promote a seamless transition to the new system.
Accounts In General.—The Federal Reserve shall prescribe new lending and accounting regulations for various types of accounts including transaction accounts and time deposit accounts described in subsections (d) and (e).
Transaction Accounts.—
Fractional Reserve Banking Ended.—The regulations prescribed under subsection (c) shall provide that—
Any depository institution shall have fiduciary responsibility for the money of any deposit on deposit in a transaction account which—
(i) shall be held for the exclusive use of the account holder; and
(ii) may not be used by a depository institution to fund loans or investments;
A dollar of United States Money shall be on hand or in a Federal Government account for each dollar in a transaction account; and
A depository institution may charge a reasonable fee for providing transaction account services.
Transaction Account Defined.—For purposes of this section, the term, “transaction account”—
means a deposit or account on which the depositor or account holder is permitted to make withdrawals by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others; and
includes demand deposits, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts.
United States Money As Source Of Loans.—After the enactment date, all lending by depository institutions may be accomplished only by the lending of actual United States Money that is—
owned by the depository institution from earnings and or capital contributions by investors;
borrowed at interest from the Federal Government; or
borrowed at interest through the issuance of bonds or other interest-bearing securities by the lending bank, to the extent that such bonds or securities are structured in a manner consistent with the purposes of this Act.
Encouragement Of Private, Profit-Making Money Lending Activity.—The regulations prescribed and actions taken under this section shall be established and taken in a manner that—
encourages private, profit-making money lending activity by banking institutions; and
prohibits the creation of private money through the establishment of lending credit against depository receipts, sometimes referred to as “fractional reserve banking”.

SEC. 403. ESTABLISHMENT OF FEDERAL REVOLVING FUND.
Revolving Loan Fund.—Subject to provision in advance in an appropriation Act, there is hereby established a revolving loan fund in the Department of Finance and Labor where amounts received from depository institutions under terms specified in section 402 of this Act shall be deposited and made available for relending to banking institutions and for other purposes.
Administration.—The Revolving Fund shall be administered by the Bureau under such terms and conditions as the Secretary of Finance and Labor shall prescribe consistent with the purposes of this Act.
National Emergency.—In the event of a finding by the President that a National Emergency exists, the Secretary of Finance and Labor, on the advice of the Federal Reserve, may draw upon up to 80 percent of the funds on deposit in the Revolving Fund. Such funds shall be returned to the Revolving Fund within 3 years of the date of initial disbursement, either through repayment of loans or through an Appropriation Act, unless the Secretary of Finance and Labor receives from the Congress specific authorization to extend the term of the loans. The authorization of Congress shall be given by joint resolution.

## TITLE V—AUTHORITY OF FDIC

SEC. 501. AUTHORITY OF FDIC.

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In General.—Except as provided in section 402 and the amendment made by section 3(b), no provision of this Act shall be construed as altering or affecting any authority or function of the Federal Deposit Insurance Corporation.

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