I attended a workshop of the „Bundesverband der IT und Kommunikationsindustrie“ in Frankfurt am Main on December 10th, 2014. I got some questions regarding the classification of the currency type Leondrino during informal talks at the workshop which caused me to this blog post. Here I summarize the answers to the key questions regarding classification:
The Leondrino concept combines the concept of positive money (Vollgeld) with the concept of market money (Marktgeld) in a digital form.
With the concept of market money (Marktgeld) different currencies compete with each other; meaning in the case of Leondrino several different branded currencies compete with each other. With the planned regulation in New York (BitLicense Framework) such different, competing virtual currencies are officially registered as a supplement to the fiat currencies.
With the concept of positive money (Vollgeld) a central institution shall issue bank money (Buchgeld), as today is already the case with banknotes. Credit institutions, such as community banks (Vollksbanken), savings banks (Sparkassen) and private banks manage this positive money solely, similar to how they do it with stocks in a portfolio today. Creation of fiat money via credit institutions is not provided. In the case of Leondrino the Autonomia, the organizational unit of the Leondrino Exchange, acts as a private central bank for each issued Leondrino (private branded currency).
Leondrino Exchange calculates the optimum money supply using scientific parameters of the underlying goods and services sector of the respective trademark, the number of customers and the money circuit parameters, in order to avoid the risk of asset bubbles and overheating (Leondrino Algorithm). In addition to the use of software Leondrino Exchange places reliance on expert committees in the decision-making to money control per currency so that Leondrino Exchange can enforce the planned conservative monetary policy with a by tendency more acceptable volatility. Leondrino is therefore not designed as hard cash (Hartgeld), but Leondrino Exchange is controlling the money supply flexibly according to specific parameters.
Due to the increasing importance of transnational e-commerce business and the lived virtual and real, location-independent communities there is a chance for new optimum currency areas, that is, in addition to the regional aspect of a currency may be other connecting elements can be crucial for an optimum currency area. The trend of the transaction costs being virtually zero, also in virtue of new technologies, such as crypto currencies, foster the chance of changing the view to optimum currency areas. Leondrino Exchange assumes that the business and the customers of global brands will be a good base for a private, efficient currency area. Therewith citizens especially of currency areas with demographic challenges also will have the opportunity to participate in the benefits of growth of a global brand, which, for example, also acts on future markets in Asia and Africa.
Peter Reuschel, Berlin, December 12th, 2014