My Testimony in Congress
August 5, 2012
On August 2, I testified before the House Financial Services Committee, Subcommittee on Domestic Monetary Policy, chaired by Ron Paul. The topic was “parallel currencies.” I think the idea of “parallel currencies” could be quite important going forward, as I described in pieces such as this:
There are a wide range of visions about what a “parallel currency” could mean. For many in the U.S., it means some sort of small-scale currency system, perhaps a “local currency” of some sort that is used in only one town. The U.S. has a history of highly distributed currency issuance, with literally thousands of independent institutions issuing their own gold-based currencies. On the other end of the scale, you could have a major national currency that serves as a gold-based “parallel currency” worldwide. This is the role the U.S. dollar served after World War II, when it was reliably linked to gold while other countries’ currencies were highly unstable. My own inclinations tend toward the large scale. I would like to see Russia, China, Malaysia, the Gulf States, or other such countries, issue a state-backed gold-based currency that would serve as a parallel currency both domestically and internationally. Perhaps it could be done by some large financial institution, perhaps one in Hong Kong where banks are already issuing their own banknotes. (If a parallel currency is issued by some large financial institution, it would have to be in a separate, bankruptcy-remote entity.)
I don’t think there is any particular incompatibility with these small-scale approaches, or large-scale approaches. You could have both. However, I think that people value uniformity and reliability in their money. This tends to mean the eventual dominance of a single, or a few, large issuers.
Here is my written testimony on the topic of “parallel currencies”: