Stella: a proposal for inter-settlement trade

We assume that future space settlements will have their own currencies [in case of Mordan settlements that will be the Talent]. Inter-settlement trade (IST) will, however, play an important role in the economic life of space settlers. And having multiple (national) currencies might be inconvenient for IST. Hence we argue for the introduction of a complementary trade currency for the trade between different settlements.

This IST currency is modeled after Bernard Lietaer’s Terra proposal (terra is Latin for earth). We will call our currency the Stella (Latin for star), abbreviated: STL. Important to note, is that the Stella will coexist alongside the own currencies of individual settlements and will not replace those. In this way space settlements will retain their fiscal autonomy and their monetary sovereignty.

Since the designed of the Stella is based on the Terra, most of their features will be the same, though there will be some minor differences. The most important difference between both currencies is that unlike the Terra Alliance, the Stella Alliance will be an inter-governmental organization instead of a non-governmental organization.

Every government of a space settlements that participates in the Stella, will have one vote in the Stella Alliance. All major decisions should be taken by a qualified majority. This in order to prevent that a few, wealthy and powerful, settlement will be able to control the system for their own benefit.

How does this currency work? A certain amount of Stella is equal to a basket of nine to twelve of the most traded commodities. For example: 1,000 Stella = 5000 kg of wheat + 1000 kg of sugar + … + 25 grams of gold. The precise basket will be updated at regular intervals by the board of the Stella Alliance.

Businesses who produce the commodities included in the Stella basket, can sell their products to the Stella Alliance. In return they receive Stellas. On the other hand people who own Stellas can reimburse those for the commodities stored by the Stella Alliance. Because the Stella is backed by valuable commodities, the Stella will be accepted by many and hence the Stella can circulate in the economy.

Example: Alice is a wheat farmers. After harvest she sells her produce to the Stella Alliance, for which she gets a certain amount of cash. With her earnings she pays Bob, who imports tractors from abroad. On his turn he pays Carol, his foreigner supplier, with the Stellas he got from Alice. Subsequently Carol exchanges the Stella for wheat from the Stella Alliance.

The Stella Alliance has to store the commodities it buys and many of these commodities will deteriorate after time. In order to cover these expenses, there will be a demurrage fee. This is a “negative interest” rate (of 3.5 to 4% a year) charged on any one who holds a Stella account. The exact rate will depend on the actual expenses of the Stella Alliance.

This demurrage fee wil have the advantage that it will discourage speculative boarding of the currency and will stimulate its circulation.

The Stella Alliance is not a central bank nor a currency board. It is not intended to make profits, nor will it acts as a lender of the last resort, nor will it maintain a fixed exchange rate for the Stella.

Like its terrestrial counterpart, the Stella could serve as a reference currency. That means that traders can express their contracts in Stella, even if they will not use the currency in actual transaction. This is discussed in more detail in our article on the Inter-Settlement Exchange System.

For more information, see:

The Terra TRC (TM) White Paper by Bernard Lietaer

The Terra (TRC) – offical website

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