Non-debt currency issuance model using government-issued tokens
- Digital sovereign money plan to replace government bonds -
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Summary
Summary (Abstract)
This white paper presents a theoretical framework for the federal government to directly issue WLFI-type blockchain tokens to realize “non-debt, interest-free, and indefinite” currency issuance that does not depend on government bonds. This model redefines the relationship between the existing government bond financial system, central bank policies, and the stablecoin market, and proposes a new form of sovereign money that integrates fiscal, financial, and settlement.
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- Background and problem awareness
1.1 Structure of the current dollar system
The current U.S. currency supply depends heavily on the following channels.
• Government bond issuance by the federal government
• Odering by private financial institutions and markets
• Public market manipulation by the Fed
In this structure, the expansion of the currency supply is inevitably accompanied by an increase in “interest-paid government debt”.
1.2 Structural limits
• Exponential expansion of government bond balances
• Financial constraints due to rising interest rates
• Political stagnation over the debt ceiling
• De facto dollar expansion by private stablecoins
These are due to the design itself that makes currency issuance and debt issuance inseparable.
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- Proposal Summary: Government-Issued Token (Government-Issued Token, GIT)
2.1 Basic concept
Digital tokens (hereinafter referred to as GIT) issued directly by the federal government have the following properties.
• Not a direct debt to the government
• No redemption deadline
• No interest payment
• Can be used to pay taxes and utility bills
• Instant payment is possible on the blockchain
2.2 Relationship with WLFI type models
The WLFI type token is
• A trust bank
• Stable coin
• Regulatoryly compliant digital assets
It has the characteristic of. This proposal extends the technical and institutional framework to the government level.
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- Comparison with government bonds
An item The funds Government-issued tokens
Legal nature Government debt Government currency
Interest payment An ant None
A maturity date An ant None
Market dependence High Low
Financial brokerage Essential Unnecessary
Government bonds are “credit products” and GITs are “payment and value preservation means”.
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- Macroeconomic effect
4.1 Financial aspect
• Permanent reduction in the burden of interest payment
• Structural avoidance of the debt ceiling problem
• Improving the immediacy of fiscal expenditure
4.2 Financial aspects
• Weakening the interest rate adjustment function due to the shrinkage of the government bond market
• Redefinition of the role of the FRB
• Competition and complementarity with bank credit creation
4.3 Inflation and deflation control
Because GIT does not have the brake of government bonds,
• Issuance volume control
• Absorption by taxation
• Usage restrictions (tokens by use)
New control methods such as will be essential.
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- Implementation model
5.1 Technology
• Public or authorized blockchain
• Issuance and repiration management by smart contracts
• Auditable on-chain accounting
5.2 System
• Issuance authority by the Ministry of Finance
• Liquidity and reserve asset management by the Fed
• Maximum issuance and rule setting by the parliament
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- Risks and challenges
6.1 Political risk
• Abuse of issuance authority
• Redistribution of financial power
6.2 Market risk
• Declining credibility in the government bond market
• Dollar status as an international reserve currency
6.3 Technical and operational risks
• Cybersecurity
• Privacy and monitoring
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- Conclusion
Government-issued tokens are a realistic option that allows the issuance of currency that does not depend on government bonds.
While it means “finance without debt”, it fundamentally redesigns the traditional financial order and power structure.
The essential issues are not economic theory, but control, confidence, and political consensus.
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Appendix A: Historical Precedent
• Greenback
• Treasury Department Currency
• CBDC
Appendix B: Definition of Terms
• Sovereign money
• Creation of credit
• Stable coin