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Interstellar Banking


> This < Interpol page discusses the Hawala system of money transfer; the oldest system of suchin the world. Any of you use it in RL, or IYTU? Any other thoughts or observations on banking in the Galaxy?
This was a tricky subject to handle.

Just as the U.S. federal gov't stated that only it, and not any of the states, had the right to print money, I had the Imperium force everyone to use the Imperial credit. Local currency was only permitted when the local technology could not handle the Imperial banking system.

My Imperium was cashless. Everyone who ever opened a banking account received a card which contained all of the account owner's banking information. This information included the amount of "money" in the person's account as well as personal details like fingerprints, retina scan, and DNA sample (and any other biometric data I hadn't thought of).

Any attempts made to change the contents of the data on the card by an unauthorized device resulted in the card's immediate self-corruption.

In order to conduct a transaction, a person needed to have an authorized transaction device. The device was about the size of 2 cd jewel cases stacked on top of one another. There were two slots: 1 for the seller's card and 1 for the buyer's card. There was a LCD display, alphanumeric pad, and biometric data input ports. I made the device intelligent enough to distinguish between a severed thumb and one connected to a living being.

When transactions were made, the cards were updated with the new account values. If the account reached zero, the card failed to permit the transaction. The transaction device also kept a log of all transactions.

Credit cards still exist. They operated on similar principles.

Only banks had the ability to distribute authorized transaction devices. And the banks were closely monitored by agents of the Imperial Banking System (IBS). Transaction devices had to be brought in every year to the bank that issued the device. It didn't have to be the exact branch. It just had to be the same banking company. All transactions were downloaded into the bank's computers. The information was then sent out to all of the other bank branches via the xboat network or other data couriers. The data was also sent to the IBS, who in turn sent the data to the other banking companies who had clientele involved in transactions with that particular device.

The devices didn't stop the trade of illegal goods and services. The nature of the transaction was never recorded. I left it in there as something that privacy rights champions successfully fought for.

I'm sure that someone can figure out a way to beat this system. However, my players gave up a while ago and haven't tried in years to think of some way around it. I also might not have remembered to write out all my other safeguards. It's late and I'm tired.
I am not sure that cash will ever disappear. Its too convienent to make purchases you don't want folks to know about, harder to trace a paper trail. All the bank cards and such are great, but are not private, no matter what rights or limitations the government may enact. If it can be violated, it will be.

Also on frontier worlds, new colonies that have not established banking systems yet, cash is as good as money, even better.
I agree with Drakon.

The advantages of cash:
1. Harder to trace
2. Anonymous
3. Negotiable without advanced technology
4. Different planets will want their own currencies for reasons as superficial as nationalism and for reasons as sound as control of their fiscal policy (if you gave up and used the CRImp, then you've given up some degree of your localized control of your economy). There are also reasons related to balance of trade and labour issues.

The Empire, in many popular models, controls the space between planets. So, it seems likely that most planets would have one or more local currencies, if they're any size. Some may choose, as for example do the Bermudans, to peg their dollar to the most stable currency (US Dollar/CRImp). Some may choose to have a significantly discounted CR just to attract business. Some may forbid transactions with CRImps entirely. Your use of the CRImp beyond the Starport boundaries will be an iffy proposition, taken on the whole. Similarly, credit and debit cards would have the same issue.

Imagine trying to promulgate a banking system over 11,000 worlds, with 30 trillion inhabitants, with communication lags (esp for security patches!) of months or longer. Factor in all the balkanization and variable tech levels in the Imperium and there is just no sensible way that there could be a workable universal cashless system.

Now, the Imperium itself may choose to be *mostly* cashless, that is to say Imperial Facilities may operate mostly thus. But even the Imperium wants to have cash, so it can (covertly) make payments or fund things for which it doesn't want an electronic track. This is useful to intelligence agencies, politicians, etc. So I can't see them being in favour of a cashless society.

Yes, Duke Ashcroft of the IMoJ may like to know where every credit in circulation is and what it is being used for, but a lot of people won't want that kind of knowledge around.

Additionally, in the model proposed above, what stops someone from procuring a credit card, taking a huge expenditure upon it, then leaving the immediate area? The only protections you could evolve would be ones similar to what I suggest - that you would be required to provide security or have a very long history in the area with many ties to the community. Otherwise, very little stops you from running up your credit cards and skipping town. Of course, limiting the amount of credit people get initially, making sure they have a history in the area, etc. all help - but even they are no gaurantee against someone who is willing to uproot once the payout is good enough.
You guys are both right, but I had to go this route in order to maintain order in my game.

I forgot to mention that the identity of who you conducted a transaction with was not listed in the order of transactions. What was recorded was debits from one account and credits to another account. It was left to others to connect the dots.

Also, adoption of the Imperial credit was a prerequisite to Imperial membership. The EU did it with today's tech. I figure that the Imperium has quantum computers at their disposal.

I'm not trying to sway you to my POV. Far from it. I'm merely offering what I did IMTU. It's kept my players quiet and they don't pay attention to the man behind the curtain keeping things in order. ;)
There are movements in several countries (one or two successfully) to avoid the Euro, IIRC. And the EU != the Imperium, by any means. The two have *very* different social and economic contexts as well as political structures.

I know you aren't trying to convince me, nor I you. We're just chatting about why a certain thing might exist in a certain form.

I'm quite sure that IMTU there are people pushing for a 'cashless society' and I'm sure closer to Core, there is a lot more of that. And even in Imperial Facilities, there may be a near cashless society, people only getting cash when they leave the Starports to go onto a planet (and then getting it mostly in local currency).

But my TU seems to make the Empire less intrusive to the planetary government (I actually think that using someone's currency is a key step in being absorbed completely....).

Nothing wrong with different TUs. And if your players and you are happy, all the better.

On the matter of traceability, just the *fact* that you've done X transactions and the amounts would tell the gov't:
1. How much business you've done
2. How much tax on that business you owe
3. How much money is actually in circulation (if no cash is) - don't underrate this, as this will *really* clamp down on the underground/illegal economy

So IMoJ Chief Duke Ashcroft will still be happy, even if he doesn't get to know who you did business with precisely.
Just to raise the level of paranoia.
If the duke wanted to know who you where doing business with he only has to have you followed OR activate your cell phone and trace it to the building your in (yes in cities with secterization of the antenas you can narrow down the signal to within a building and with a hand held scanner you can locate someone to within there body (feet)).
OR activate your cell phone and turn on the mouth piece and listen, then run the voices through a data base of people of interest and you not only know what but who is doing business.
The above is current technology so think what the Imperium could do.
Just another conspiracy for you.
The Euro is a good analogy for the Imperial Credit, and the reason why kaladorn's point has merit. It is my understanding that the treaty binding the EU members requires certain specific controls on government expedentures on the theory that government deficit spending above a certain point would be bad for the Euro.

[In order to spend money you don't have, you have to borrow. Another borrower in the market pushes up interest rates, making it harder for wealth producing enterprises to make capital expenditures. Supply and demand. Governments do not produce wealth, only (hopefully) an environment where wealth can be created, and where its citizens have the motivation to do so. So, higher interest rates, caused by government deficit spending makes it harder to create wealth, and makes the population that less motivated to try.]

But to date, France is already in violation of those limits, Portugal is heading that way, (last I heard) and there seems little effort to force those member states back into line. Indeed, for the politicians of those member states, any action to fix the problem can be political suicide. Lowering spending means lowering benefits. Raising taxes means, well raising taxes. Neither of which are the voters likely to appreciate.

Brussles may control monetary policy, but government spending and taxing power is held by the member states. And unless Brussles does reign in those governments in violation, then folks worldwide are going to lose confidence in the Euro. If and when that happens, any state that uses the Euro is going to find it worthless overseas, as money only has value as long as folks act as if it does.

So I think kaladorn is being more realistic here. Member systems inside the Imperium would probably have their own internal currency, or they might use the ImCR. They will want a means of controlling their own monetary and fiscal policy, and as long as everything is kept in system, there would be no problem using a local currency. One does not have to worry about the government of Jewell going bankrupt, as long as its their own currency that gets messed over.
In order to spend money you don't have, you have to borrow.
That is why you need Imperial Debits. When you spend Imperial Credits you owe the Imperium money, and if you don't pay them back, Emperor Stephron will send out the Imperial Marines to get you and make you pay! In order to avoid this unfornate circumstance from happening its better to spend Imperial Debits.

I don't for one minute doubt that a major role of the Imperial Marines and Navy, as tasked by the Imperial Nobility, is seeing to it that his Majesty's taxation regimes (of various natures, including tarrifs, usage fees, registration fees, planetary taxes, etc etc.) are paid up. Mostly, it will constitute 'show of force' and sometimes a lesson to those who try to balk the Empire...

The problem with most unification plans (for cities, for counties, for superstates) is that it ignores the local desires to have control of their own fate and it assumes that a distant government or bureaucracy can implement successful policies that respect local interests and concerns while being more cost economical.

Sadly, this has generally proven false. The merger in Toronto and the one in Ottawa have shown that there aren't really significant savings (in fact, the reverse!) without accompanying (sometimes disguised) service cuts under the truthinfospeak guise of 'service realignment' or 'rationalization'. To my mind, these kind of consolidations are a 'shell game' to allow these service cuts, which done in and of themselves would be blatantly opposed. As part of a larger amalgamation, which everyone else is (of course) doing their part in, they are harder to recognize, let alone object to.

So, to stay on-topic, I'm not really sure what the Empire gets out of forcing its currency on member states. This would be a deal breaker for some potential members and would provide debatable benefits for the Empire.