Macrobusiness

MyRBA: The first stop for government payments

The last article discussed the importance of reforming the Reserve Bank of Australia (RBA) and allowing ALL Australians (and not just the banks) to open and operate deposit accounts (MyRBA) at the RBA. This article discusses how MyRBA accounts can be used by the government when making routine government payments to the general public.

When the Commonwealth parliament passes laws providing that payments will be made to specified members of the public, it is truly bizarre that members of the public are required to enter into a business relationship with a private organisation (i.e. open a bank account) to receive that payment. After all it is not as though we are still living in the horse and buggy era and Canberra is just a fancy sheep station and there is no alternative to using the infrastructure of private banks to distribute payments by the government.

It is even more absurd when we have a fancy public owned central bank, the wonders of the internet and a nation wide network of public offices (Australia Post) that are perfectly capable of providing the necessary agency services.

All new payment recipients to have a MyRBA account

When the RBA is instructed by the Commonwealth government to allow ALL Australians (and not just the private banks) to open and operate a deposit account at the RBA, the government should require all new applicants for social security / Centrelink payments or service providers to the Commonwealth government (e.g. government employees, suppliers, companies etc) to open a MyRBA account at the RBA. This account will then be used by the government to make routine social security and other payments.

The accounting for these payments will be extremely simple as they only require a debit to a government RBA account and a credit to the MyRBA account of the payment recipient.

Debit Australian government RBA account

Credit MyRBA account of payment recipient

As the method of making the payments is as important as the payments themselves and constitutes a fundamental functional of government, there will be no charges or fees associated with the operation of a MyRBA account. The cost of providing the MyRBA account services is even more fundamental than defence and will be a hell of a lot less expensive…. one serve of $90B submarines please waiter.

It is important that the payments are received into a MyRBA account as that means that no particular private organisation receives favoured treatment from the government by being an approved payment handler. Effectively that is what the private banks cherish. Being a limited class of approved handlers of payments from the government.

Forcing the private banks to compete for transfers from MyRBA account holders will trim some of the fat off their flabby hips and shake the sloth from between their ears.

But are the recipients forced to use their MyRBA account?

No. What a person does with their payment after it has been paid into their MyRBA account is a matter for them.

Having regard to the amount of most social security payments it is likely that most social security recipients will spend the contents of their MyRBA account directly via the usual electronic payment systems or via cash withdrawals made via an agent of the RBA. Agents of the RBA may include Australia Post but may also extend to any business that is willing to be paid to deliver defined MyRBA account deposit, withdrawal or transfer services.

However, if a social security or other payment recipient prefers, they will be free to transfer the full amount of each and every payment they receive from the government to their preferred unsecured private bank investment account (aka “deposit” account) so they can collect the fabulous amounts of interest on offer (approx 0.1%), have access to fancier payment options (including international payments) and pay whatever fees and charges the bank extracts for the privilege.

There are some valid reasons why someone might wish to move money out of their MyRBA account into the somewhat secret world of private bank accounts. Some people prefer to have private organisations like a private bank spying on all of their transaction data rather than some cardigan wearing public servants who does not give two hoots how much they spent on spandex or hooch. Some people trust that large private profit driven organisations will not mine their data and use it to come up with cunning strategies to extract a slice of their account balances or flog them debt products to acquire the lifestyle they deserve right now.

The most distrustful of all will be keen to convert the contents of their MyRBA account into cash and use that to acquire gold nuggets they can bury under the lemon tree in the backyard (warning – watch out for the dog …she bites) or to acquire freshly mined cryptos or accounting entries issued by foreign banks.

All that is fine.

Freedom is the business we are supposed to be in but a state/private bank monetary cartel, like we have now, is a long way from that.

But why change a thing? Those private banks are good chaps and very fair.

Notwithstanding the recent Hayne Royal Commission into Banking there are still some odd people who insist that a “case must be made” before the Australian public are allowed the privilege of opening and operating a deposit account at the publicly owned RBA …..just like the banks are allowed to do.

They will flap their arms and insist that an army of public servants at APRA and ASIC and a host of other government entities and a mass of banking laws and regulations several feet thick, means that we can trust the private banks and it is completely unnecessary to change a thing.

Invariably they will also insist that running a few million deposit accounts is simply beyond the capacity of the RBA. But oddly they insist that the RBA is perfectly capable of monitoring the performance of the highly cunning and sharp private banks.

In effect their weird argument seems to be that if we spend a fortune chaining down the crooked, broken and greedy private banks it will be almost the same as allowing the public to have MyRBA accounts.

The agenda they are really promoting is transparent.

They demand that the public be forced to continue to maintain relationships and accounts at private banks because they know those compulsory relationships are extraordinarily valuable both commercially and politically. They quite rightly fear that if most members of the public have no reason to enter into a relationship with a bank only a fraction will continue to do so. Worst of all, if most members of the public don’t have a relationship with a bank they may not be easily scared into thinking that the interests of the private banks are the interests of the general public.

The horror, the horror.

Why only new payment recipients?

Rome was not built in a day. Initially it will be enough to require all new recipients of social security and other government payments to receive their payments via a MyRBA account. Existing recipients can continue to receive their payments via their unsecured private bank investment accounts.

However, as the other advantages (stay tuned peeps) of a MyRBA account become apparent it is likely that most people will elect to open a MyRBA account as soon as possible.

Summary

MyRBA accounts are a critical step in reforming the Australian monetary system.

They will re-centre the monetary system around the balance sheet of the publicly owned central bank and most importantly kick the Zimmer walking frame from under our lazy and bloated private banking sector by forcing them to truly compete for investments from the Australian public.

If the Australian public are keen to transfer some of their savings from their 100% safe MyRBA accounts into not publicly guaranteed and unsecured investments and have a flutter on the lending management skills of our private banks, they will be free to do so but the days of being forced to do so will be over.

And of course the super freedom lovers will remain free to convert their MyRBA balances into the latest creations of cyberspace and old fashioned mining.

Categories: Macrobusiness

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