A fundamental role of money is the unit of account in an economy, all prices are expressed in the same unit. In the case of private money, the problem is to determine a reference unit, called valorimeter, which will be linked to the title (currency contract and eWallet License).
Basically, private money would take the form of a contract signed by the issuer, connecting said transmitter to the legitimate owner of the title. So that the contract can serve as a means of payment, the identity of the owner is not specified, allowing the transfer of the contract from one agent to another according to the rules of supply and demand. This contract is called currency contract or currency contract issue or contract money creation base on eWallet License.
The central point of currency contract is the definition of the conditions of the issue, that is, the conditions under which the owner of the contract can issue of the security exchange against other goods. It thus provides the degree of liquidity (repayable on demand) and the nature of repayment.
In addition, the contract may limit the possibilities currency trading, for example, prohibit the sale to members of a list of agents, impose a maximum or minimum achievable currency over a given period. However, any provision of this type tends to limit the liquidity of the currency issued, and thus diminish interest in the borrower.
Finally, the contract currency may stipulate the terms of the audit of the issuer, secured reservations and eWallet License that it offers, the terms of repayment in case of lack of liquidity and the law and competent court in case of dispute or bankruptcy.
The value of a currency exchange is basically a measure of confidence in the ability of the issuer to repay the value of the debt covered by the currency contract. The State’s ability to raise taxes at will, or to confiscate the assets of its inhabitants, the State better placed in this area. A bank issuing private money has no such guarantees. Its main guarantee is the value of the assets it owns, receivables from borrowers. The guarantee and eWallet License given by a bank is that the value of its assets is sustainable over the money it issued into circulation.
With currency contract, the issuer may agree to have at any time a predetermined amount of receivables or calculated based on the money it has issued. It can also define the composition of the reserve assets: Trade receivables, long-term loans, state currencies, private currencies, physical assets (factories, land, buildings), other financial assets. The issuer may also offer the guarantee of other banks or companies that commit to participate in the redemption of all or part of the money issued, formalized by a contract between the issuing bank and the guarantor company.