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If the central bank is buying counterfeits with the new currency, won't that encourage the creation of more counterfeits just so they can be exchanged?
by smitherfield 9y ago
If the central bank is buying counterfeits with the new currency, won't that encourage the creation of more counterfeits just so they can be exchanged?
- protomyth 9y agoThe article emphasized that the counterfeit currency cost about the same amount to make as the actual trading value of the currency.
- an_account 9y agoBut the article also claims that the central bank would have to buy the counterfeit (and legit) currency at a premium, so that it's worth it to the citizens to exchange.
- protomyth 9y agoThe premium looked pretty small and I would imagine the buyback would probably exclude anything that wasn't in circulation at the time it happened shortening the time table for something that needs to be shipped in.
- smitherfield 9y agoYes, but that's just begging the question — where is value being created in this equation?
- protomyth 9y agoI could see value if they went to the dollar in their conversion but I, like the article, am unsure what the value in new shillings are.
- lmm 9y agoOnce there's an established currency it becomes practical to make notes that are worth a lot more than they cost to produce, which is a direct cost saving for the same amount of currency in circulation and gives a currency that's more practical (don't have to carry as many notes around). And having the money supply under deliberate control should lead to more consistent inflation which makes it easier for individuals and businesses to plan/budget etc.