Banks liabilities are an unjust burden to the public

Exchange of emails with the Bank of England:

(Note: CBDC is Central Bank Digital Currency)

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From: Ben Dyson, BoE

To: Marco Saba

Date: May 30, 2018

Dear Marco,

Sorry for the late reply. Banknotes are recorded as a liability on the central bank’s balance sheet. This is a standard accounting practice. So in the same way, CBDC would be recorded as a liability on the central bank’s balance sheet.

Ben Dyson

Manager | Digital Currencies Team | Notes Directorate

Bank of England | Threadneedle Street | London EC2R 8AH 
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Answer:

From: Marco Saba

To: Ben Dyson, BoE

Date: June 5, 2018

Dear Ben, 

here is my suggestion for the problem of those zombie-liabilities coming from money creation:

How to solve banks liabilities: when a banker create new money it incurs a debt to the whole society (seigniorage) which is currently represented by the Treasury of the host nation. The problem is that money creation is accounted mislabelled as a generic liability (a zombie liability never paid off) i.e. labelled as "debt to depositor" in the case of a commercial bank and "currency in circulation" in the central bank books. The counterpart of this liability - a liability that should be better labelled as "seigniorage due to the Treasury" - must be accounted as an asset in the Treasury books of the host nation and paid by the banker to the same Treasury - which currently is not. So the easy solution is renaming banks liabilities as "seigniorage due to the Treasury" and at the same time we have to open a receiving account on the Treasury books ("seigniorage from money creation") where the liability will be settled and paid.

Else, unpaid banks liabilities are an unjust burden to the public and a way to hide the whole profits coming from the money creation activity.

KInd regards,

Marco Saba

Forensic accountant

Mana Bond Ltd