Financial soundness by sovereign wealth stock (SWS: Sovereign Wealth Stock)
Summary
Financial soundness by sovereign wealth stock (SWS: Sovereign Wealth Stock)
- Purpose
State equity (SWS) is a new capital securities issued by the government.
The purpose of this plan is not to realize a tax-free country.
The aim is to build a sustainable financial structure by gradually reducing the dependence on re-borrowing of government bonds and controlling the balance of government bonds and the burden of interest payments.
Compression of government bond balance
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Reduction of government bond fees and interest payment burdens
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Improvement of fiscal balance
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Reducing the financial burden of future generations
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Realization of sustainable finance
- What is SWS (national stock)?
SWS is a unique capital security issued by the state.
The basic design is as follows.
・1 share = 1 yen face value
・No voting right
・No dividends
・In principle, there is no obligation to repay the principal
・Can be bought and sold in the market
・Issued by the government
・It can be used to redeem government bonds under special laws
SWS is not a currency, nor is it a stock under the Company Act.
It will be legislated as an original capital security issued by the state in the financial system.
- Redemption of matiry government bonds by national shares
Current government bonds require repayment of the principal when they reach maturity.
In this plan, we will create a system that can be redeemed by SWS instead of issuing new government bonds to repay some or all of the mating government bonds.
For example, if a 100 trillion yen government bond reaches maturity,
100 trillion yen of government bonds are due
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Issued 100 trillion shares of SWS
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SWS is issued to government bond holders
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Repayment and extinction of 100 trillion yen of government bonds
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Do not issue new government bonds
It is a mechanism called.
This is not a method of cashing out national stocks once and repaying government bonds.
According to the special law, we will establish a system of “redemnsement in kind” that recognizes the issuance of SWS itself as a redemption of government bonds.
- Effect on fiscal consolidation
By introducing redemption by SWS, the need to permanently refinance manuring government bonds into new government bonds will be gradually reduced.
As a result,
Reduce dependence on refinancing government bonds
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Control the increase in government bond balances
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Reduce the burden of future interest payments
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Reduce the cost of government bonds
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Improve the fiscal balance
Aiming for financial soundness.
- Market value of domestic stocks
SWS is issued at a face value of 1 yen, but if bought and sold in the market, the market price may exceed or below 1 yen.
For example, if a SWS with a face value of 1 yen becomes 2 yen in the market, the holder can get a capital gain by selling it.
On the other hand, it is necessary to stipulate clear rules by law for the appraised amount used for the redemption of government bonds, such as treating it as “1 share = 1 yen” in the system.
- The difference between domestic stocks and currencies
SWS is not a currency issued by the government.
“1 share = 1 yen” indicates the face value of the SWS, not the currency of the SWS itself as the yen.
Therefore,
Yen = currency
SWS = Capital securities issued by the state
Establish a clear distinction.
- The difference between national stocks and ordinary stocks
SWS is not a share that represents the ownership of the company.
・Do not have the right to vote
・Do not receive dividends
・It does not mean ownership of the state
・Not a share under the Company Act
It is positioned as a securities issued independently in the national financial system.
- Legal system and accounting system
In order to realize SWS, it is necessary to design a clear system under the special law on how to repay government bonds, the basis for issuing SWS, holding and transferring, and accounting handling, etc.
Especially,
・Handling SWS as a capital securities
・Legal recognition of government bond repayment by SWS
・Detining the evaluation method of SWS at the time of redemption
・Clarifying the accounting classification of government bonds and SWS
Is important.
- Held by the central bank
In terms of system design, the central bank will also consider holding SWS.
If the market price rises, there is a possibility that the central bank will sell the SWS held, which may result in a sale gain.
However, it is necessary to establish independent rules for holdings and sales by central banks based on the separation from monetary policy and the relationship with fiscal finance.
- Roadmap for fiscal consolidation
SWS is not intended to replace all government bonds at once.
We will gradually introduce redemption by SWS from government bonds that are about to expire.
The funds
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Maturity
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Redemption by SWS
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Compression of government bond balance
↓
Reduction of interest payment burden
↓
Improvement of fiscal balance
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Financial consolidation
- The final goal of this plan
The purpose of the SWS concept is not to eliminate taxes.
It is to break away from the fiscal structure that the country depends on excessive debt and build a sustainable finance that does not leave excessive debt to future generations.
SWS is a system that aims to transform from financial management centered on government bonds to a new financial management that combines liabilities and capital.
Conclusion
SWS (Sovereign Wealth Stock) is
Instead of “returning government bonds with government bonds”,
“Redeemment of matury government bonds with national shares”
It proposes a new financial method called.
By gradually replacing government bonds with national stocks, government bond balances and interest payments will be reduced, and fiscal sustainability will be increased.
Realize a sustainable and healthy national finance that does not leave excessive debt to future generations.