CD Functional requirements for Monetary Sovereignty

#### **2016-09-19**

1. Avoid new international debt creation (SM rather than selling more NZ bonds or other international lending) [Req- debt overhang]
2. SM for State investment in insolvent corporates (XX State ownership rather than bail outs)
3. Buy back M0 reserves to back the NZD (long terms stuff, and this will be minimised till there is less pressure on inflation, and less important than the first two points, as M0 will initially come from 2.)
4. Other (SM to replace loss of junk bond assets held by Reserve Bank, similar to 3. and we're probably better to just write-off bad debt, but they must reciprocate and write-off our bond obligations, the future isn't clear, so we'll need SM available as a flexible tool as crisis gets more mobile).  [Does not appear to be the jubilee idea since it is restricted to debt held by RBNZ.  [fact?]

#### **2016-09-23**

5) Capital controls will be the most important functional requirement of Sovereign Money.  Controls on foreign investment and devestment.  Must be applied hard and without warning, before anything happens regarding sovereign money, capital controls first!  [The concern here seems to be that if some dramatic shift in monetary policy is in the works that there will be risk of capital flight.]  [XX Req- overseas flows‎]

6) Implementation suggestion:  Higher inflation in the short term, would be another functional requirement. Expand the inflation/deflation band to anywhere between -2% to 8%?  [The "band"?  Does this mean the allowable range of inflation values before there is an intervention?

7) Devalue the currency, which not only means competitive export advantage, but we can also buy back our assets at lower prices.  [Functional requirement to use SM to adjust the foreign exchange rate downwards].[Req- Forex devaluation]

8) Enabled funding.  Regional economic development, urgently required to substitute for our previous dependency on foreign investment which flowed through real estate etc. [Req- Regional sovereignty]

9) Enabled funding.  UBI or similar to stimulate economic restructuring and provide a livable wage for those in employment transition

10) Manage deflation cycles and strengthen the currency value as it re-gains correlation with commodity values, once debt levels have been readjusted and govt has increase state ownership in core sectors.  This is a long term requirement.

**2016-09-25 "Final"**

1. Major review of Free Trade and Economic Service Agreements, bilateral and multilateral, to include negotiations on debt default [Req- Study]
2. Major review of Reserve Bank Act 1989, Public Finance Act 1989, Fiscal Responsibilities Act 1994 and others Bills as required (Companies Act 1993, Takeovers Act 1993, Securities Transfer Act 1991, Securities Market Act 1988, Crown Entities Act 2004, Financial Market Conduct Act, and Taxation Acts...) to allow sovereign money as a manageable monetary tool [Req- Study]
3. Capital controls to restrict real estate, term deposits and govt bonds from foreign investment, plus transaction taxes on foreign exchange, stocks, securities and real estate   [Req- overseas flows]‎ [Req- credit categories‎] Req- Sovereign debt restrictions]
4. Inflation target band widened to allow higher inflation and cyclical deflation
5. UBI, with fiscal-deficit financed by Reserve Bank money creation [Req- Be bold with OMFG (rejection of tax constraint)]
6. Public banking; government purchase of minor stake in all NZ registered banks, financed by Reserve Bank money creation (shares owned by development-/Green Investment Bank), Government and Crown Enterprise banking under NZ ownership (Kiwibank), plus a Regional- and Unitary- Government bank-network that includes Iwi representation and Hapu participation. [Req- Publicly owned banks (partial)]
7. Money- and capital-reserve requirements for lending gradually increased, and combined with a gradual increase in share of government ownership (money creation from private banks would be approximately in balance with the increase in government ownership of private banks via Reserve Bank money creation) [Req- Gentle phase-in ]

#### **2016-09-27 "refined final"**

**1) Free Trade and Debt Review
2) Monetary and Fiscal Acts Review
3) Capital Controls on Investment and Foreign Exchange
4) Inflation Target Broadened
5) UBI [**Req- Welfare motivated decisions‎ ] **6) Public Banking; government purchase of minor equity stake in all NZ registered banks, financed by Reserve Bank money creation.  Banks must sell equity shares to govt, as capital backing for new lending.**
**Req- Public trustee - ownership**

**7) Regional Development; a regional-government development-bank-network that includes iwi representation and hapu participation. This development-bank-network could use capital from govt equity stakes in NZ registered bank, as backing for lending. [**idea that Req- Accountability includes Iwi representation]

**8) Lending Reserve Requirements Progressively Increased**