"Aldan" has not carefully read my article when he states: "By not being able to actively direct spending into depressed areas, your plan would actually be more inflationary than that." It is the current system of fractional banking that allows credit to be created indiscriminately for non productive and speculative activities. I make is clear that self-liquidating negative interest rate money could be targeted for infrastructure and to replace welfare payments funded by debt or taxes.
"Arjay" likewise has missed the point that digital money removes fractional banking. It is no longer required. Negative interest rate digital money is anyway self-liquidating.
"thinkabit" concern about privacy is misplaced as digital currency could use the Bitcoin crypto technology. The promoters of Bitcoin in Australia suggested to the Senate committee hearing on Nov 26 last year that all Bitcoin purses be registered with the ATO. The ATO in any event can obtain access to private bank accounts.

Shann you did not say who would control this new digital currency. Bitcoin operates without banks and Govt control. These two powers are not going to let any new currency become mainstream without them having a huge say.

My view is that we diversify currency even more. Why not have a 1 oz silver coin that fluctuates in value according to market forces? People then could have a currency that appreciates in value. Max Keiser produced a digital Maxcoin which is backed by 1oz of silver.

You can have a currency backed by anything of worth,so long as there are rules stopping the rise of inflationary money which currently we don't have. The power of money creation should reside with the people. That is the very definition of democracy which we currently don't have.

Note;the HSBC has been busted many times laundering drug money. Afghanistan now produces 90% of the world's heroin under the rule of the USA. Those powers who really control the drugs are not going to eliminate cash as it will then reveal our real criminals.

Shann Turnbull, your article didn't say you'd curb banks' ability to borrow and lend profitably. Who would issue loans under your system? And what would their criteria for doing so be?

Anyway, even if we did also get rid of fractional reserve banking, my objection still stands. The government can of course target money anywhere, but with the dollar in freefall, they'd have a much stronger incentive not to spend it at all.

Your digital currency is an entirely bad idea. It would turn our economy into something like Argentina's, replacing our relatively stable currency with something that nobody will want to hold. That would effectively destroy the enormous benefit of currency sovereignty that our government currently enjoys.

Aidan quote "That would effectively destroy the enormous benefit of currency sovereignty that our government currently enjoys." Who are you kidding Aidan ? We create very little of our own money debt free.

Current cash rates for our banks from the Private US Federal Reserve is 2.25% which is almost 6 times the rates in the USA and GB. So our banks borrow at 2.25% and loan out at 5 to 6% with admitted inflation of 3%.The real rate of inflation due their money printing is like 6% or more.There is no way in the long term that our banks are making profits on mortgages. They are making money on derivatives which are 6 times the value of our mortgages. Banks are borrowing against our mortgages to gamble on derivatives. It is a gigantic bubble waiting to bring on the mother of all collapses.

No, Arjay, most of the bank's borrowings are not from overseas but from their own customers. They also tend to borrow a lot from each other. So although there's a strong argument that they're too reliant on foreign borrowing and we should make it easier for them to borrow from the RBA instead, your assumptions that the mortgage business isn't profitable are baseless. And you don't seem to understand the way banks actually use derivatives.

Aidan our banks have nowhere near enough deposits to inflate the property markets as the have now achieved. The normal fractional reserve ratio is that $1 of deposit can create $10 worth of loans. That ratio here and in the USA is now far greater. Fannie and Freddie May had ratios of 1:300. Most of the money being created in not going into productive enterprises. In the USA most goes into the shares and derivatives. Since 2006 US companies have borrowed $5 trillion to buy their own shares. The US Govt is now in $17 trillion debt equal to their GDP with unfunded liabilities over $100 trillion.

If our banks are so safe ,why did they pass "bail in" at the last G20 meeting in Brisbane? "Bail In" is the ability of banks to convert our deposits into their shares when they get into trouble. They did this in Cyprus. Here is the evidence. http://cecaust.com.au/bail-in/ Our banks are not safe since their derivative exposure has almost doubled since 2008.

Banks consider derivatives to be a form of insurance but how can your insurance policy be 6 times your assets? Derivative are just complex bets on markets going up or down. The share market has now detached from the real economy and is at an all time high.Derivatives debts must be honoured first and depositors come last.