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Pretty late in this thread, but just had a thought. To have ETF money we don't actually need a real ETF. Imagine that the CB just designates a portfolio of securities as the definition of the currency. And lets assume that all those securities are cleared by a central custodian (e.g. DTC in the US, CDS in Canada but we'd also need the equities custodian). Then all we'd need is a simple software solution. If you own some mix of all assets in the basket then that could also be viewed as holding money (the designated portfolio) plus some additional holdings of securities over and above the proportions in the designated portfolio. These are just different "views" of our assets. So if we want to do a money transaction that would just effect a change of ownership of all the assets in the proportions of the reference portfolio. Individual securities would still be transacted via the relevant exchange.

It's possible that custodianship would have to be a government service, or at least that only securities that are cleared by the government custodian would be eligible for inclusion in the money reference basket. This might make a lot of sense anyways, since securities clearing is likely in a major state of market failure. Clearing generally takes 3 business days and sometimes indefinitely long. These delays (money typically sits as a zero interest demand deposit between the trade date and the settlement date) and uncertainties (it's impossible to know when a bond sale is actually going to clear) cause significant demand for money balances which is a huge subsidy to the banking sector (which, of course, jointly owns the clearing house). There is no (good) reason why clearing couldn't be instant.

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