Letters
Suggestion forCayman's Financial Stability
Dear Sir: What the Cayman Islands really needs to do, is toproduce a currency backed by solid, interest-bearing investmentsand issue banknotes accordingly. Like, take a few million dollarsand invest it in US dollars in thousands of banks, at interest.If the return is, say, 6.32 percent one year, then put 5.32 percentinto the pool which backs the currency.
The other one percent is profit.Of the 5.32percent, some can be invested in other currencies; the unit ofcurrency still is backed by full US dollars, and then partiallyby a basket of other bank deposits in other currencies. It's likehaving 100 US dollars and 8 Canadian dollars instead of 105 USdollars.
The profit would be collected each yearleaving the notes to appreciate enough to be preferable to USnotes. Each note issue would feature the latest in counterfeit-resistanttechnology and would clearly be marked as having an expirationdate of 2101.
Every ten years, a new design might be issued,but the old notes would remain valid until their stated expirationdate, at which time the note becomes void and the profit is realisedby the government.
The advantage of this system is that theCaymanian currency would soon be recognised as advantageous overUnited States currency around the world, asCaymanian currencywould rise against the US dollar, yet the increase in value couldbe collected confidentially, at any bureau de change.
Even a massive, sudden redemption of notescould be covered, by simply withdrawing the bank deposits to meetthe demands of the presenters.Imagine a jurisdiction the sizeof the Cayman Islands being the issuer of the world's leadingcurrency and collecting one percent of it each year. Please findsome good, charitable purpose for part of it.
Tom AlciereNashua, NH USA