Dedicated to the prospect of setting up a full reserve bank in the USA, as well as analysis of the current economic environment.

Monday, February 16, 2009

Gold/silver money in Georgia?

It looks like Georgia is considering a bill recognizing gold and silver coins as money, and allowing banks to offer them as currency. The bill also suggests that the state transact its business in gold and silver. How would you like to receive your tax refund in a stack of silver coins?

The bill makes me wonder - is there any current law forbidding a bank from accepting gold or silver for deposits, or from disbursing it upon withdrawal?

2 comments:

  1. I came to visit this site for updates, more comments, more articles, but not much activity. Who are you, may I ask? How many people are there with you willing to work on such a project?

    As far as your question is concerned, I think offering gold deposits would legally convert this scheme into an investment or "security" offering, instead of a checking account, unless you put in a clause that people have an "option" to take back either the gold, or the original deposit in dollars. On the other hand, if this bank continues to work outwardly in dollars and only keepds gold in "reserve with itself", in that case, bank would fail if gold price goes down and people demand their dollars back. And if gold price goes up, then there is some kind of "limit" that will come into play on how much max profit a bank can offer to depositors, so they would still not be able to make use of it. Just my own impressions. I'm not an authority on this subject.

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  2. Asif,
    Thanks for your comment. Unfortunately, the workload at my day job have left me limited time with which to pursue a project like this. There will likely be a tremendous investment of 1) time(research) and 2) money required for setting up such a bank.

    Sadly, because such an entity has not existed for who knows how long, there are few experts out there that can provide guidance for such an endeavor... not to mention the fact that likely regulatory hurdles (FED Reserve requirements, capitalization requirements, etc.) would probably cause the government to look upon such a "bank" unfavorably.

    As for your other question, I've spoken with several individuals in my circle who have expressed interest in doing something like this. This site was mostly setup to gauge interest at a wider level.

    My name is Ben Johnson, and though, by trade, I'm not in the financial services industry, the topic is something of a hobby for me, especially over the last few years as things have spun out of control.

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