Better Money™

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Definitions

Until I figure out a better way to post these, I'm sticking them all on this page to serve as a single consolidated reference. Over time, for some of them, I'll also put up separate standalone posts if I feel additional commentary might be warranted. Please note that while many of these definitions are for terms in general usage, a number of them are highly context specific in order to afford precision in my description of a System implementing Better Money. 



Account means a mechanism integral to the Settlement Platform serving as a means for a specified Account Owner to hold quantities of the Base Moneys that circulate on the Settlement Platform thereby enabling the Account Owner to receive Spends and, via an Account User authorized by the Account Owner, to make Spends.



Account Maintenance Fee means a fee assessed on and drawn from SubAccounts by System Provider from time to time in accordance with a mathematical formula published by System Provider involving Balance and time.



Account Module means a constellation of Accounts consisting of either:

  • a single Treasury Account and all non-Treasury Accounts to or from which Spends from or to that Treasury Account may be made or received, or,
  • a Personal Account and its associated Referral Incentive Receipts Account.



Account Owner means a Member who/that alone or jointly with one or more other Members owns an Account.



Account User means a User who is a Member and who is authorized to log-in as himself to the System and exercise Permissions that have been granted to him and not revoked relating to particular Accounts.



Allocated Storage means vaulting of precious metals in a Repository where the stored material is physically segregated from material belonging to other parties and labeled or otherwise specifically designated and identifiable as belonging to its actual owner as opposed to constituting an asset belonging to the owner or operator of the Repository. Material held in Allocated Storage is not Fungible in the sense that its owner retains title to the specific physical items Bailed into the vault.



Applicant means a Person on whose or which behalf the Person himself or a Proxy has submitted an application for Membership and who/which has not yet been accepted as a Member.



Ask price or exchange rate means the higher price or exchange rate at which an Exchange Provider offers to sell a particular Currency at a particular time relative to the lower (Bid) price or rate at which that Exchange Provider simultaneously offers to buy it.



Available Balance means the Balance in a SubAccount minus accrued liabilities for Account Maintenance Fee and any Holds.



To Back (also Backed or Backing) means to maintain a reserve of otherwise unencumbered assets specifically designated to offset specified liabilities.



To Bail means for a Person, the Bailor, to surrender property to the custody of another Person, the Bailee, resulting in a Bailment.



Bailment means the act of Bailing and the resulting obligation on the part of the Bailee to hold the Bailed property for the purpose specified by agreement of the Bailor and Bailee and not to use it for any other purpose such as loaning it to a third party or encumbering it as security for a debt.



Balance, without further specification, means Settled Balance.



Base Money means Monetary Liabilities of an Issuer serving as the medium in which like-denominated Broad Money is payable. I discuss Base Money as a topic here.



Broad Money means Monetary Liabilities of an institution other than an Issuer. I discuss Broad Money as a topic here.



Comptroller means a Role requiring performance of operations involving a Comptroller Account for the Distribution and Redemption of the Base Money of a particular Currency.



Comptroller Account means an Account, belonging to an Issuer, designated as the sole Account permitted to receive Issuance Spends or to make Distribution Spends involving a particular Currency.



Correspondent Banking means a relationship between a pair of banks—neither of which are a Monetary Authority—in which Deposits at one bank serve as reserves for the other.



Currency means a distinct brand of money. I discuss Currency as a topic here.



Currency Exchange Transaction means a transaction consisting of a Funding Payment followed by a Fulfillment Payment.



Customer Due Diligence ("CDD") means measures undertaken by System Provider to elicit, determine, substantiate or verify a Member's source of funds and anticipated usage of an Account or Account Module.



De-Issuance means the process by which Base Money is retired and extinguished such that it no longer exists.



De-Issuance Spend means a Spend in which the Comptroller Account for a particular Currency is the paying Account and the Mint Account for that same Currency is the receiving Account resulting in De-Issuance of a quantity of Base Money for that Currency equal to the amount of the Spend.



Delivery Instruction means an instruction to a Repository to remove designated assets from the custodial arrangements that enable their function as reserves Backing a particular Base Money and to deliver them to the custody of a designated Person.



Delivery Order means a Delivery Instruction that has been authorized in accordance with System requirements.



A Deposit (noun) means a liability of a Person (e.g. a bank) payable on demand or at maturity, offered without legal requirement of prospectus and used as a means of funding an asset portfolio which may include remunerative assets, gains or losses from which inure to the benefit or detriment of the Person for whom/which the deposit constitutes a liability. A Deposit also means the corresponding asset of the depositor.



Deposit Spend means a Spend to an SCI-Receipts Account belonging to a Depository Institution for further credit to a particular Deposit account.



Depository Institution means a Financial Institution that has been authorized by the System Provider to engage, as a business, in holding value on account for their customers the liability for which is payable via a Spend or which is offset on their balance sheet in part or in whole by assets comprised of a Balance or Balances held in Accounts.

I discuss Depository Institutions here.



Disbursements Account means an Account that can only be used to make Spends to Accounts in other Account Modules and to make and receive Transfers to or from the Treasury Account in the same Account Module.



Disputed Spend means a Spend that an Account User on the payer or recipient Account claims was made, or which the System Provider determines may have been made, without proper authorization or for which the Spend Instruction was authorized but Erroneous. A Disputed Spend also means a subsequent Spend from the recipient Account of a Disputed Spend which the System Provider in its sole judgment determines may constitute an attempt to wrongfully profit from the Disputed Spend.



Distribution means the process by which newly Issued Base Money is distributed to the Primary Dealer on whose behalf it was created.



Distribution Spend means a Spend from a Comptroller Account to an Account of a Primary Dealer.



End User means any User acting otherwise than pursuant to a Specialized Role.



Enhanced Due Diligence ("EDD") means measures undertaken by System Provider in addition to CDD for Members deemed to constitute a higher potential risk for money laundering, terrorist finance or other criminal activity. EDD may include but is not limited to greater scrutiny regarding source of funds or more detailed characterization and documentation of business practices.



Erroneous means, with respect to a Spend, a Spend that was authorized by an Account User with the requisite Permissions on the paying Account but for which the Spend Instruction contained an error either in specification of the Spend Amount or the recipient Account coordinate.



Exchange Order means an order placed by a customer with an Exchange Provider in order to engage in a Currency Exchange Transaction.



Exchange Provider means a Financial Institution that has been authorized by the System Provider to engage, as a business, in the provision of Currency exchange services that require the making or receiving of Spends.



Financial Institution means "financial institution" as defined in US Code 31 USC 5312(a)(2).



Fine Content means a quantity of weight equal to the total weight of a bullion bar multiplied by its Purity. For example a bullion bar weighing 1,000 grams with a Purity of 0.995 would have Fine Content of 995 grams.



Fulfillment Currency means the Currency being purchased by a customer from an Exchange Provider in a Currency Exchange Transaction.



Fulfillment Payment means the second and concluding payment of a Currency Exchange Transaction, in the Fulfillment Currency, from an Exchange Provider to its customer.



Funding Currency means the Currency being used by a customer to pay for a purchase of Fulfillment Currency from an Exchange Provider in a Currency Exchange Transaction.



Funding Payment means the first payment of a Currency Exchange Transaction, in the Funding Currency, from a customer to an Exchange Provider.



Fungible means characterized by properties that can be objectively and readily determined and quantified such that different objects or aggregations of objects may serve as a fully acceptable substitute or replacement for particular objects. For example liabilities reckoned in an accounting system are Fungible (and inherently divisible) since they are represented as numeric constructs.



Good Delivery means precious metal bullion that certifiably meets all Good Delivery standards as published by a standard-setting authority that is regarded in the wholesale gold banking industry as exemplifying best practices.



A Hold means a restriction applied by the System Provider to a SubAccount that has been the recipient of a Disputed Spend that prevents a quantity of the relevant Currency equal to the lesser of the:

  • Available Balance, or,
  • Amount of the Disputed Spend minus the associated Spend Fee minus any accrued Account Maintenance Fee derived from the increment of Settled Balance due to the Disputed Spend,

from being available for Spending.



Holder means any Member who/that elects to acquire, accept, or otherwise receive or own a quantity of Base Money in circulation within the System.



Identifier means an item of information such as but not limited to name, address, government issued identification number, date of birth (or incorporation), contact information, knowledge the possession of which is specific to an individual, biometric data, or documents that may be used to establish or verify the identity of a Person.



Issuance means the process by which Base Money is created.



Issuance Spend means a Spend in which the Mint Account for a particular Currency is the paying Account and the Comptroller Account for that same Currency is the receiving Account resulting in Issuance of a quantity of Base Money for that Currency equal to the amount of the Spend.



Issuer means a Member:

  • liable for performance of obligations declared in the Issuer's Declaration of Liability for a particular Currency, and,
  • assigned and bearing responsibility for the Roles of Mint and Comptroller for that Currency.



Issuer's Declaration of Liability means a contractual declaration of liability defining a particular Base Money proffered by the Issuer of that Base Money and accepted by a prospective Holder.



Legal Person means any Person, such as but not limited to a corporation, trust or government entity, that is not a Natural Person.



To Make a Market (or to act as a Market Maker) means for an Exchange Provider to proffer an Ask price and a Bid price for each Supported Currency Pair, at which that Exchange Provider will accept and honor Exchange Orders from its customers.



Member means a Person who/that has been granted Permissions by the System Provider enabling participation in the System.



Mint means a Role requiring performance of operations as the Account User of a Mint Account for the Issuance and De-Issuance of the Base Money of a particular Currency.



Mint Account means a special account on the Settlement Platform, belonging to an Issuer, the absolute value of each SubAccount balance of which:

  • equals the combined sum of the Settled Balances of all like-denominated SubAccounts in the System, and,
  • constitutes Monetary Liabilities as defined in that Issuer's Declaration of Liability.



Monetary Authority means one or more Persons acting in the Roles of Issuer and System Provider for the Base Money of a Currency.



Monetary Liabilities means liabilities denominated in the unit of account particular to a Currency and created to serve as a medium of exchange.



Native Unit of Account means the unit of account specific to a particular Currency.



Natural Person means a human being.



Natural Rate of Interest means an interest rate that influences the allocation of resources between current consumption and investment for the future such that demand for investment funds is matched by saving to fund the investments.



Numeraire means the Native Unit of Account of a particular Currency designated as the basis for specification or calculation of a quantity of a Currency which may be the same or a different Currency.



One person, One Member Rule means a rule that any particular Person may participate in the System as one and only one Member.



Open Market Operations means the actions of a Primary Dealer, specifically to surrender assets or to Redeem, in accordance with provisions set forth in an Issuer's Declaration of Liability for a particular Base Money and applicable agreements between the Primary Dealer and the System Provider, which lead to an obligation on the part of that Issuer to respectively increase or decrease the amount of that particular Base Money in circulation.



Permission means a right granted by the System Provider or a delegate of the System Provider enabling exercise of a specified Privilege.



Person means a unique human being or other entity who or that has been assigned a unique number such as a tax identification number by a government or is itself a government.



Primary Dealer means the Role, and a Member who has been granted the requisite rights and Permissions to perform that Role, bearing responsibility to conduct Open Market Operations for a specific Currency.



Privilege means a specified capability for interacting with System resources.



Proxy means a Member who is a User acting on behalf of another Person with regard to that Person's status as an Applicant or Member.



Purity in reference to a gold bullion bar means (T-BM)/T where T is the total weight and BM is the weight of any non-gold content such as base metals used for alloying purposes.



Real Money means a Currency, of which:

  • Some or all Monetary Liabilities denominated in it are suitable for general use as a medium of exchange,
  • No Monetary Liabilities denominated in it can be construed as Broad Money of another Currency,
  • The Base Money is suitable to be held by Financial Institutions as a reserve against like denominated Broad Money obligations such as bank Deposits,
  • The Base Money:
    • is backed at all times by liquid assets held in readiness and in sufficient quantity as to assure its Issuer's ability to buy back all that has been spent into circulation, or,
    • physically embodies that which gives it value.

I discuss Real Money as a topic here.



Receipts Account means an Account that can receive Spends from an Account in a different Account Module and can only make Transfers to the Treasury Account in its own Account Module.



To Redeem means for a Holder of a particular Currency and the Issuer of that Currency, each from their reciprocal perspective, to engage in Redemption.



Redemption means the process by which the Holder of a quantity of Base Money may return it to its Issuer and receive in exchange a quantity of assets as specified in that Issuer's Declaration of Liability.



Redemption Spend means a Spend undertaken on the authority of a Primary Dealer for the purpose of Redemption in which an Account belonging to that Primary Dealer for a particular Currency is the paying Account and the Comptroller Account for that same Currency is the receiving Account.



Reference Exchange Rate means an exchange rate provided by System Provider for Member convenience for purposes of expressing an approximately equivalent value for a SubAccount Balance or a quantity conveyed via a Spend in terms of a Numeraire that differs from the Native Unit of Account of the Settlement Currency.



Repository means a treasury grade vault facility commonly used by banks that engage in wholesale bullion trading operations and specifically used by [a particular...stay tuned!] Bullion Reserve Special Purpose Trust for storing precious metals in accordance with the purpose memorialized in its declaration.



Reserves Store means an online store offered by an Issuer and accessible only by a Primary Dealer enabling the designation of specific reserve assets to be delivered in fulfillment of a Redemption contemplated by that Primary Dealer enabling System to automatically enforce internal controls implemented to prevent breach of the applicable Issuer's Declaration of Liability.



Role means a defined set of functions, privileges and obligations assigned to and assumed by a designated Person or category of Persons.



Root User means the Account User who creates an Account or a successor who has been designated by the Root User on an Account and who has acknowledged and accepted the designation.



SCI-Receipts Account means a Receipts Account that can only receive Spends generated via a Shopping Cart Interface.



A Security means an instrument serving as a vehicle of investment, the initial sale of which is to raise money for the general use of, or to finance substantial investments of, the common enterprise of the seller. The purchaser of a Security, in turn, does so primarily in pursuit of profit and/or capital gain ultimately derived from the efforts of that common enterprise resulting respectively in earnings or appreciation.



Settled Balance means the total quantity of a particular Currency contained in a SubAccount denominated in that Currency exclusive of accrued liability for Account Maintenance Fee and any Holds.



Settlement Currency means the Currency a quantity of which comprises the Balance in a SubAccount or is conveyed in a Spend.



Settlement Platform means the system described in this Better Money blog, access to which is offered exclusively as a service to Members by the System Provider, that provides for the Issuance, distribution, circulation, Redemption and De-Issuance of quantities of the Base Money of specified brands of Real Money by means of the posting of bookkeeping entries in an accounting system administered by the System Provider.



Shopping Cart Interface means an interface enabling a Spend Instruction generated from a specified url of a specified Internet merchant, Exchange Provider or Depository Institution to be accepted by the System for processing and, if conforming to System rules, executed.



Specialized Role means a Role other than End User that is required for the governance or orderly function of the System.



Spend means an Account-to-Account transfer, effected by book entry crediting the Account of the payer and debiting the Account(s) of the recipient(s) in an atomic transaction in fulfillment of a Spend Instruction that has been authorized in advance by an authorized Account User on the paying Account with said authorization communicated directly and securely from payer to System and authenticated by the System.



Spend Amount means the quantity of Settlement Currency conveyed or to be conveyed in a Spend.



Spend Fee means a fee automatically deducted from the recipient Account, specifically the SubAccount, of a Spend.



Spend Instruction means an instruction specifying the parameters of a Spend.



Spread means the difference between the Ask and the Bid price or exchange rate proffered by an Exchange Provider for a particular Supported Currency Pair.



Strict Debit Rule means a programmatically enforced rule that a Spend Instruction specifying a Spend Amount that is greater than the Available Balance in the paying Account will not be executed.



SubAccount means a Currency-specific subdivision of an Account. For example, an Account may entail one SubAccount for the System's gold-linked Currency and another for a System Currency that is anchored to USD.



Supported Currency Pair means a pair of Currencies between which an Exchange Provider offers at a particular time to Make a Market.



System means the system comprised of the Settlement Platform, Accounts and all related processes, hardware, software and intellectual property such as trademarks, copyrights and patents



System Provider means the Role, and the Person incumbent in that Role, responsible for assuring all aspects of the integrity of the System other than liabilities and other responsibilities assigned by contract to Persons designated to fulfill other Roles. The System Provider provides for operation and administration of the Settlement Platform, and is responsible for assigning and/or granting all Permissions that enable other Persons to act in designated Roles.



Throughput Exception means an exception to a Throughput Limit such that a single Spend conforming to the parameters of a Throughput Exception Request that has been approved by the System Provider and has not expired is not counted against the Throughput Limit of the Account Module for which the Throughput Exception Request was granted.



Throughput Exception Request means a request submitted with respect to a particular Account Module for a Throughput Exception, specifying for the anticipated subject Spend whether inbound or outbound, the counterparty Account, the purpose and maximum Spend Amount.



Throughput Limit means a limit placed by System Provider specifying an amount determined by System Provider that can be received by Spends into or Spent from a particular Account Module during a specified interval of time.



Trading-Disbursements Account means a Disbursements Account outgoing Spends from which, with the exception of Transfers to the Treasury Account in the same Account Module, can only be made to an Account in an Account Module belonging to a Financial Institution or, in the case of a Trading-Disbursements Account belonging to a Primary Dealer, to a Comptroller Account.



Trading-Receipts Account means a Receipts Account incoming Spends to which can come only from an Account in an Account Module belonging to a Financial Institution or, in the case of a Trading-Receipts Account belonging to a Primary Dealer, from a Comptroller Account.



A Transfer means a Spend, for which no Spend Fee is deducted, where both the paying and recipient Accounts are in the same Account Module.



Treasury Account means an Account that can only make or receive Transfers to/from other Accounts in the same Account Module.



Unauthorized Spend means a Spend the Spend Instruction of which was accepted by the Settlement Platform as authorized and was executed but is subsequently determined to have lacked proper authorization.



User means a Natural Person who has submitted a unique username to the System, successfully associated a password and any other required log-in credentials with that username, and made representation that any Identifiers they present as identifying themselves are valid and do not constitute an attempt to violate or circumvent the One Person, One Member Rule and who, upon presentation of log-in credentials and the System Provider's authentication and approval of same, is permitted to exercise specified Privileges.



Visitor means a Person who/that accesses resources of the System for which log-in is not required.



Withdrawal Spend means a Spend from a Disbursements Account belonging to a Depository Institution in fulfillment of a particular depositor's withdrawal order decrementing that depositor's like-denominated Deposit account.

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