Part I. Banking and Monetary Reform

SECTION 9. REGULATION OF THE EXCHANGE VALUE OF TREASURY CREDIT-NOTES
 

(A) The Office of the Comptroller of the Currency will establish a method for calculating and publish at least weekly a United States Treasury Credit-Note Exchange-Value Index which will track the exchange value of treasury credit-notes against a composite list of not less than 12 nor more than 24 commonly traded items, including labor rates, rents, cost of professional services and basic commodities, excluding gold and silver. The initial list will be prepared by the Comptroller of the Currency with the approval of Congress and, once approved, will not be changed more than once in any five-year period and then only with the consent of Congress. The exact method used for calculating the Treasury Credit-Note Exchange-Value Index will remain fixed and will be published as part of the public record. The initial value of the Treasury Credit-Note Exchange-Value Index will be set at 100.000 as of the date this Act becomes law.

(B) The Board of Governors of the Treasury Reserve System will administer the affairs of the nation’s monetary system by adjusting the aggregate amount of the nation’s currency and credit to maintain the Treasury Credit-Note Exchange-Value Index within a range of 97 percent to 103 percent of its initial value by using four primary regulation tools:

(1) By setting the percentage of reserves required of the commercial banks. Commercial banks will not be penalized should their reserves fall below the percentage required provided —

(a) the bank grants no new loans for 90 days after any day on which its reserves were below the requirement; and,

(b) the bank does not call for immediate repayment of any outstanding loans which are performing within normal limits; and,

(c) the reserves of a commercial bank do not fall below 50 percent of the reserve requirement, at which point the bank would be declared insolvent.

(2) By setting the national discount interest rate, the interest rate at which commercial banks borrow funds from Treasury Reserve Banks.

(a) Commercial banks may obtain loans from their district Treasury Reserve Bank at the national discount interest rate in exchange for their best acceptable commercial paper.

(b) District Treasury Reserve Banks may obtain funds for these loans from the Treasury Reserve Account, paying that account one-half of the interest income earned as a fee for using these funds.

(3) By purchasing income-producing United States Treasury obligations in the open market.

(4) And by impounding funds within the Treasury Reserve Account or by transferring funds from the Treasury Reserve Account to the General Account of the United States Treasury or by depositing funds with commercial banks. All funds within the Treasury Reserve Account are maintained separately from all other United States Treasury funds and may not be transferred, appropriated or expended by the United States Treasury except at the sole discretion of the Board of Governors of the Treasury Reserve System.

Read Explanation and Details for Section 9.