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The Reserve Bank doesn’t need authority to issue new cash. When the commercial banks want cash they buy chanel handbags from the Reserve Bank and pay for it with a cheque issued against their own accounts. The chanel handbags deducts its costs of producing the cash and
manolo blahniks shoespasses the profit to Treasury. The profit, otherwise known as seigniorage, is most of the face value of the currency, so selling cash improves the Government’s accounts. That already happens every day, the Institute said.

“In our proposal the Treasury receives the E-notes from the Reserve Bank and then it simply disburses them in payment for goods and services to improve New Zealand’s investment in infrastructure, health and education, including earthquake relief for Christchurch,” Mr Manji said.

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“The important point is that the new money goes directly into the economy and not onto the balance sheets of the banks.”

“While the government discusses borrowing yet more debt and bringing in a new tax to pay the costs of rebuilding Christchurch we propose issuing new cash E-notes to do the same job. E-notes are exactly the same as the bank notes we all carry in our wallets and handbags except that they only exist in bank accounts.”

He contends an E-note injection of at least $5 billion is unlikely to be inflationary with current unemployment at close to seven per cent.

“Our modeling suggests $5b represents about $6.5b of new GDP, which would reduce unemployment by around three per cent and save up to $275m in interest
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