A Sovereign State Monetary System Based on a Three-Way Balance of Currency Issuing Entities
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Summary
This proposal defines a new monetary and fiscal system composed of three currency issuing entities: the government, the central bank, and the sovereign. This system expands the traditional fiscal structure by incorporating credit creation by the sovereign while using a national currency as the base of value.
Traditional fiscal policy has relied on credit creation by the government and the central bank. In this model, in addition to this, the sovereign is positioned as an independent currency issuing entity, distributing credit creation among the three entities.
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■ Basic Structure
This system is composed of three currency issuing entities.
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■ ① Government
The government is one of the currency issuing entities and is responsible for taxation and redistribution.
• Role: Tax collection, public spending, asset management
• Function: Token holding and market supply
• Essence: Point of value recovery
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■ ② Central Bank
The central bank issues national currency and is responsible for the stability of the entire monetary system.
• Issuance: Banknotes and related currencies
• Role: Liquidity supply, price stability
• Essence: Value stabilization mechanism
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■ ③ Sovereign
The sovereign is defined as a new currency issuing entity.
• Issuance: Sovereign token (basic income token)
• Role: Credit creation
• Essence: Source of value creation
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■ Currency Structure
This system has a multi-layered currency structure based on national currency.
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■ National Currency
• Issued by the central bank and government
• The ultimate standard of value
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■ National Currency Pegged Stablecoin
• Has an obligation to exchange with the national currency
• Exchangeable 1:1
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■ Sovereign Token
• Issued as a crypto asset
• Exchangeable with stablecoins
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■ Trust Structure
Trust in this system is established by the following exchange relationship:
Sovereign Token
↓ (Exchange)
Stablecoin
↓ (Obligation to Exchange)
National Currency
Value ultimately converges to the national currency.
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■ Interrelationship (Circular Structure)
The three currency issuing entities form an interdependent circular structure.
Government ↔ Central Bank ↔ Sovereign
• The sovereign issues tokens
• The government collects and supplies them
• The central bank stabilizes the whole
This relationship functions as a closed loop.
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■ Basic Income Mechanism
Basic income in this system is realized as currency issuance by the sovereign.
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The sovereign fund issues tokens.
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Tokens are distributed.
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Tokens circulate through the market or government.
This is a credit supply without debt.
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■ Relationship with Government Finance
The government secures funds through the following means:
• Market sale of tokens
• Tax revenue
• Existing financial instruments
Tokens are recorded as assets in government accounting.
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■ Definition of Assets
Assets in this model are defined as follows:
An asset is the right to extract value from others in the future.
Sovereign tokens satisfy this definition by being exchangeable.
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■ Features
This system has the following features:
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■ Decentralized Credit Creation
Credit creation is decentralized among three entities: the government, the central bank, and the sovereign.
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■ Stability of the National Currency Base
The value is pegged to the national currency through exchange obligations via stablecoins.
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■ Debt-Free Credit Supply
Sovereign tokens are issued independently of debt.
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■ Asset-Based Finance
The government can hold tokens as assets and make them liquid.
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■ Essential Definition
This system is defined as follows:
A national currency-based digital currency system with a mutual credit creation structure by three currency issuing entities.
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■ Conclusion
This model maintains the existing monetary system while integrating the sovereign as the currency issuing entity within the system. This simultaneously achieves decentralization of credit creation and expansion of the fiscal structure.
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