Month: January 2010

The inevitable change in our monetary system?

Everywhere now there is the dawning consciousness among thoughtful minds that this age contains elements not understood or contained within the working rules of the older systems of government, economics, sociology, or even religion, and that it is due to new principles that have to be introduced into the base and can in no wise be met by a change in the superstructure of society. Even more remarkable, almost incredibly to those who have been hitherto lost voices crying in the wilderness, is the swiftly growing volume of agreement that it is the obsolete and dangerous monetary system that, primarily, is at fault. […] All are agreed that here at least change is inevitable, the only doubt indeed now being whether any part of the system, which through a lack of imagination as to what might have been is still apt to be described as having “worked well in the past”, can survive into the future.

This was not written in 2008 in the wake of the great financial crisis, it was written in 1934 by Frederick Soddy in his book The Role of Money. Here are many of us, almost 70+ years later saying the same thing. I really hope we don’t have to wait another 70 years.

Making moving your money easy

The move your money campaign has got a lot of visibility recently. Although the actual benefits of moving your money can be discussed, it seems pretty clear that it can’t be bad either for community banks and credit unions, since it will effectively do the job of breaking the big banks that the government seems unable to do.

Whether you agree or not with the impact of moving your money to smaller financial institutions, you will certainly agree that doing so is difficult.

If we put aside the transfer of loans, and focus on deposits, in particular checking, one hurdle is the fact that you may have given out your bank account number to a number of third parties for direct debit of various subscriptions: card insurance, health insurance, mortgage, etc.

How then can we make moving your money (almost) a one-click operation?

It seems to me that virtual bank account numbers may be an appropriate solution. A bank institution would issue virtual bank account numbers that you would configure to forward debit/deposit requests to a real bank account number. When you want to move your money, you would open a new bank checking account, transfer you funds to this new account, then re-map the virtual bank account # to the new account.

Such a virtual bank account scheme may also be used for managing relationships and preventing unauthorized access to your funds: you may be issued as many virtual bank account numbers as you wish and use each of them for each service provider who you want to automatically debit you. This way, you may decide to turn off a virtual account if you fail to stop the relationship with the provider in other ways.

A service provider providing virtual bank accounts could provide a centralized view of the automatic debit/deposit that you have agreed to, in VRM fashion.