In MONEY 2.0, every account comes with a money creation limit and a balance limit. While the money creation limit defines the available credit, the balance limit determines the maximum positive balance the account can hold without incurring a balance fee.
All new accounts start out with balance and money creation limits of both 100 currency units.
Once an account is active, balance and money creation limits are gradually determined by each market participant's trade volume, while the original account limits expire.
In addition to the individual account limits, the currency administrator can set system-wide limits that cannot be exceeded by any account.
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Details
• It probably goes without saying that the existence of account limits means that MONEY 2.0 isn't completely (abundantly, in an unlimited way) available to everyone and everywhere. Account limits are basically a tradeoff to maintain the utmost availability, while not opening up the currency to fraud and abuse. This is achieved in several ways - the ability to issue more money is given to those who have already proven their ability to bring goods and services to the market, and who therefore not only require a larger share of the exchange medium, but who will also inject corresponding value into the system and keep their account volumes at an adequate level. With the account limits being dynamic, participants whose economic activities aren't too volatile should only rarely feel them, if at all.
• To maintain the equilibrium in a mutual exchange system, positive and negative balances need to be treated along the same lines. Putting some pressure on negative balances seems unavoidable to ensure the system isn't abused - allowing members, on the other hand, to hold unlimited positive balances without penalty would lead to a buyer's market and force sellers to settle for unreasonably low prices.
• It may seem natural to grant higher account limits to new participants that seem more trustworthy (e.g. after assessing their credit risk or accepting securities). However, since MONEY 2.0 isn't legal tender, the main criterion for determining account limits isn't the absolute economic power of a participant, but the amount of which is allotted to MONEY 2.0. Since this portion can only be determined in practice, currency administrators should exert caution in this respect.
• In case two business partners alternate as buyers and sellers, purchases and sales are offset against each other, until one side is determined as the net buyer and the other as the net seller. In this process, older transactions are eliminated first.
• The total amount by which a seller's balance or money creation limit can increase through his interaction with a particular buyer, cannot exceed 25% of that buyer's own balance limit, respectively 30% of his money creation limit.
• If an account stays unused for a longer period of time, the shrinking account limits may render it unusable. Account users who have lost their original account limits of 100 currency units can apply to have them reinstated. Reinstatement should be granted automatically, unless the money creation limit is currently exceeded or the last reinstatement has happened less than two years ago.
• System-wide limits can help curb the possible influence that any single participant can gain on MONEY 2.0. Limits can either be absolute, or relative (e.g. to the system's total trade volume, or to the system account's coverage). Another approach to introduce additional security could involve regular credit checks of larger market participants.
• It probably goes without saying that the existence of account limits means that MONEY 2.0 isn't completely (abundantly, in an unlimited way) available to everyone and everywhere. Account limits are basically a tradeoff to maintain the utmost availability, while not opening up the currency to fraud and abuse. This is achieved in several ways - the ability to issue more money is given to those who have already proven their ability to bring goods and services to the market, and who therefore not only require a larger share of the exchange medium, but who will also inject corresponding value into the system and keep their account volumes at an adequate level. With the account limits being dynamic, participants whose economic activities aren't too volatile should only rarely feel them, if at all.
• To maintain the equilibrium in a mutual exchange system, positive and negative balances need to be treated along the same lines. Putting some pressure on negative balances seems unavoidable to ensure the system isn't abused - allowing members, on the other hand, to hold unlimited positive balances without penalty would lead to a buyer's market and force sellers to settle for unreasonably low prices.
• It may seem natural to grant higher account limits to new participants that seem more trustworthy (e.g. after assessing their credit risk or accepting securities). However, since MONEY 2.0 isn't legal tender, the main criterion for determining account limits isn't the absolute economic power of a participant, but the amount of which is allotted to MONEY 2.0. Since this portion can only be determined in practice, currency administrators should exert caution in this respect.
• In case two business partners alternate as buyers and sellers, purchases and sales are offset against each other, until one side is determined as the net buyer and the other as the net seller. In this process, older transactions are eliminated first.
• The total amount by which a seller's balance or money creation limit can increase through his interaction with a particular buyer, cannot exceed 25% of that buyer's own balance limit, respectively 30% of his money creation limit.
• If an account stays unused for a longer period of time, the shrinking account limits may render it unusable. Account users who have lost their original account limits of 100 currency units can apply to have them reinstated. Reinstatement should be granted automatically, unless the money creation limit is currently exceeded or the last reinstatement has happened less than two years ago.
• System-wide limits can help curb the possible influence that any single participant can gain on MONEY 2.0. Limits can either be absolute, or relative (e.g. to the system's total trade volume, or to the system account's coverage). Another approach to introduce additional security could involve regular credit checks of larger market participants.