What is it in finance?

DEMURRAGE, as funding, is the costs related to maintenance or reserved currency for a certain period of time. Like inflation, Demirrage intentionally reduces the purchasing power of money for a certain period of time, discouraging the accumulation of money and theoretically supports economic activity. While increasing money stock by government or central banks leads to inflation, which also depreciates the currency, Demurrage promotes expenses and investment by imposing regular fixed fees or taxes on the money held. For example, if a four percentage fee against 1000 currency units were applied every year, the account value would be reduced by 40 units of the currency per year. This negative interest provides motivation to someone with more money than can be used for lending, even at an extremely low interest rate.

Advocates of the negative currency of interest report a number of potential benefits of this system. Demurrage and borrowers over the creditors, which facilitates the credit and the reduction of interest rates. Instead of accumulatingactive circulation of money. Unlike the current leisure system, in which wealth simply creates greater wealth due to interest, there is no advantage in the Demirrage monetary system, thereby reducing the polarization of well -being. Unlike inflation with an ascending cost of cost, demurrage will not harm a person with limited resources.

Detractors of negative interest systems point out that the expected beneficial effects of such a system have not been studied or proven. There has been a huge increase in the use of local currencies, many of the charges, for the last 20 years, but local currencies are only accepted in the community, thereby affecting the potential efficacy of large operations. Barter systems, with a direct exchange of services for services or product for the product, will perform, which can facilitate tax evasion. In addition, in a world with different forms of currency they can holdElé money easily avoid fees for demuration. For these reasons, the beneficial economist John Maynard Keynes favored inflation over Demurrage to stimulate the economy.

If the Central Office charges and collects negative interest fees, the resulting funds are used to cover operating and administrative costs. When the government operates a Demirrage currency, fees are used as tax revenues to finance government programs and services. Some of the proposed systems represent the redistribution of funds evenly for the population of currency users. Alternatively, fees may cover the actual storage costs of commodities or gold.