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Fiscal Policies and Inflation (Editors: Uyumez, M.E. & Hacikoylu, C.)

36th International Public Finance Conference

ISBN 978-975-8675-84-5

APA	Aslan, M. (2022). Use Of Digital Currency In Tax-Free Financing Of Public Spending. Uyumez, M.E. & Hacikoylu, C. (Ed.) Fiscal Polices and Inflation. Nisan Kitabevi. Eskisehir. 489-503.

Memduh ASLAN ORCID 0000-0002-9512-3876

Use Of Digital Currency In Tax-Free Financing Of Public Spending

Abstract

Blockchain technology and its leading mysterious asset cryptocurrency cause new revolution of the world. But the revolution is not crypto assets themselves, today profiting on crypto assets is a temporary situation, eventually the authority will dominate the technology. The ledger technology is more revolutionary than crypto assets. Ledger technology is more revolutionary than crypto assets. While electronic money defined as a term in directive 2000/46/EC of The European Parliament and Of the The Council, blockchain was developed in 2008 and bitcoin came alive in 2009. By crypto assets threaten the public rules as using for laundering the dirty money of underground economy. When crypto assets became a mean of laundering the dirty money of underground economy and threaten the public rules , governments began to regulate the subject. Central Banks  began to study on the national digital currency. But on the other hand, digital currency probably there will be a serious problem of money creation capabilities of banks over deposit money. And, this will also cause a deficit of money source for crediting the markets. In this study, we are offering a new temporary digital currency (STEPARA) that can be created by banks without any necessity for money source for conventional banking affairs. STEPARA is not available for saving, so the money necessity (seigniorage right) that will arise from the value added, could be covered by central banks. This new bank currency (STEPARA) that funded by the future commercial receivables could also used for liquidation of the commercial debts against other traditional means as checks, bonds, policies etc.  We simulate, calculate and show the affects on micro, macro and public economy, when if STEPARA used against the checks in 2018 and or when the company discounted its future receivables in to cash same day of sales.

Keywords: Digital Currency, seigniorage, tax, financing of public expenditure, STEPARA

JEL Code: E51, E58, G28, H62, K34

1. Introduction

Money is a financial instrument that has been the most speculated but has not yet been substituted. In addition to the spending and savings of individuals at the micro level, money itself has now become an investment tool. Although to preserve the money’s value by minting it on precious metals such as gold and silver, it turned out that this option did not have a sufficient structure to prevent the great depression. As a matter of fact, II. With World War II, the gold standard collapsed (Kuruç,2016, 8).

The USA, Canada, Japan, Australia and Western Europe gathered in the Brettton Woods region with the thought of the resumption of international trade and the rapid re-establishment of the international monetary system destroyed by the world wars period, and discussed the new monetary system in order to be able to trade among themselves. While British Keynes suggested an international currency depending on the value added in trade and varying amounts of gold, American White’s view of indexing the other currencies to the US dollar and to the US dollar prevailed (Tomanbay,2017,13) . However, by 1976, the insufficiency of gold to meet the added value of production caused the system to collapse and Bretton Woods officially ended with the Jamaica Agreements in 1976 (Halm,1977, 12).. Although history has justified Keynes, countries preferred to switch to a floating exchange rate regime instead of a new gold-indexed system. It has been debated if there is a provision of money or not, from that day.

In recent years, crypto-currency propagandists argue that money has no provision and that the one who prints the money becomes unjustly enriched. They also argue that with decentralized cryptocurrencies on blockchain technology, the individual will protect their purchasing power, and the state cannot be a partner in this by printing free money(Özkul & Baş, 2020,61). But, there is a need for a real market that the money can buy real things. And mostly these markets are under the control of the states.

On the other hand, money has a provision that depends on added value of production as Keynes pointed out. New money is needed in order to store the new added value created as a result of production in an economy except of the product itself. Theoretically, it is expected that the purchasing power of money will not change when an amount of new money is printed equivalent to the added value in an economy. The states are authorized to print money, therefore money is the main indicator of sovereignty (Çatlı & Şimşek,2021,171). In order to use the currency internationally, it must be convertible with other currencies. In order for the money printed for the first time to be put on the market, it must be spent by the government. So, the difference between the nominal value of this newly minted money and the printing cost is named seigniorage right, and this is a kind of a public revenue (Süslü & Baydur, 202, 98).

Central banks have determined price stability, in other words, keeping the value of the national currency stable, as the main task for the balanced use of the seigniorage right. However, as a requirement of commercial life, there is a need for banking activities between those who have money in hand and those who need this money for finance. Banks depositing partial provisions to the central bank for the loans they use enables banks to create fiat money. There are criticisms that not forcing the banks for complete provisions by central bank causes waiving public’s seigniorage right. In the current financing system, the views that argue that the seigniorage right being used by  not the society, but the banks, and that the central bank should force the banks giving full provision for the loans extended, have been voiced more loudly in recent years (Kutval,2022,54).

Reserve currencies, especially the US dollar, which is used in a significant part of international trade, also put pressure on the national currencies of import-based economies using floating exchange rate regimes. Thus, the need for foreign currency in imports causes reserve currencies to become investment and savings tools and the to become a stakeholder in national currency’s  seigniorage right.

The inclusion of cryptocurrencies, whose owner and control are unknown, in the struggle to get a share from all this seigniorage right, has caused the concept of digital money to come to the fore in many countries. With the Directive 2009/112, the European Union has made regulations so that cryptocurrencies do not harm the monetary system. In our country, with the Law No. 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions, legal rules have been introduced for the printing of digital money. The Central Bank of the Republic of Turkey banned the use of cryptocurrencies directly or indirectly in payment transactions in our country in 2021.

As in all countries, our central bank has serious digital currency studies in our country. Although the Swedish government has announced that they will switch to digital money instead of crowns in 2022, it has not yet achieved this transition (Bloomberg,2021). Members of the U.S. banking community announced the launch of a proof of concept (PoC) project that will explore the feasibility of an interoperable digital money platform known as the regulated liability network (RLN)(Businesswire,2022). China, which almost does not allow the use of physical money in its domestic market, has a leading role in the world in digital money applications. China, which has made strict quarantine practices under pandemic conditions, has been able to strictly implement quarantine practices by taking advantage of the digitalization of its payment system. The transition of countries to digital money will prevent banks from creating fiat money and will ensure that a significant part of the national seigniorage right is returned to the central bank. However, this will seriously affect the traditional incomes of banks.

With the transition to digital money, banks must be able to print their own digital money instead of fiat money for futures and lending. While the banking activities will be able to continue without any problems with the temporary special digital currencies to be designed over the forward receivables, the seigniorage rights to be formed will be transferred to the government. With the transition to digital money, the known and accepted truths in all areas of the economy, including public finance, will also change.

According to Article 73 of our Constitution, taxes can only be collected  for financing public expenditures. The net tax obligation is the difference between the other public revenues and the total public expenditure. As a public revenue, the increase in seigniorage revenues  will naturally reduce the need for tax revenues. In this study, it will be revealed that public expenditures can be financed with seigniorage income increases to be obtained via using digital money without the need for taxes.

In this study we will try the find the answers of  the questions as follow: can Public Expenditures be financed tax-free; how will the digital Turkish lira affect banking;  how should banks develop financing models in Digital Turkish Lira;   is it possible financing without resources and interest-free;  are we ready for the digital cash economy;  could Universal Basic Income (UBI)  be financed in a liberal market.

2. Currencies of Electronic Environment

It is an inevitable reality that paper formed money will completely disappear from our lives in the near future. A significant part of the money used as a means of payment emerges as the money created in the electronic environment. Cryptocurrencies are not legal money and are not the subject of our study, nowadays they are called crypto assets instead of money.  The legally recognized electronic environment money types are as follows:

Electronic Money: It is the legal money issued to be blocked in the fund account in the bank in return for funds within the scope of the Law No. 6493 and can be used as a payment instrument. Except for special circumstances, it should be paid back to the depositor on the first business day following the day it is requested.

Deposit Money: Pursuant to Article 4 of the Banking Law No. 5411, banks are authorized to provide loans and dematerialized payment services. Banks are required to deposit a certain portion of these amounts to the central bank as required reserves for the loans they give and the deposits they collect. In this way, banks can create deposit money that can be used for payment, like paper money.

Digital Money: the term of digital money was used for all kind of means of payment whether it is legal or not. But, nowadays, digital money is used as central banks’ issued money that its emission is controlled via identification numbers. It is waiting that digital money will be used instead of paper money that all has identification number. Term of digital money we used here is as a fiat money of central bank that could be identified and the emission is under controlled.

2.1. Money Supply and Seigniorage Capability

The money supply in Türkiye by September 2022 is shown in Table 1.

Table 1. Contribution of Broad Money Components to the Annual Growth in M3 Money Supply  (September 2022)

	September 2022 (Million TRY)	July 2022 (%)	August 2022 (%)	September 2022 (%)
M3	7.604.421	80,35	87,16	84,91
Funds Received from Repo Transactions	12.456	0,14	0,15	0,14
Money Market Funds	74.728	0,59	0,76	0,83
Debt Securities Issued	40.724	0,47	0,49	0,45
M2-M1	4.635.158	48,07	53,06	51,76
Time Deposits (TRY)	2.595.540	25,49	28,94	28,98
Time Deposits (FX)	2.039.618	22,58	24,12	22,77
M1	2.841.355	31,07	32,70	31,73
Currency Outside Banks	294.855	3,23	3,44	3,29
Demand Deposits (TRY)	737.017	7,59	8,30	8,23
Demand Deposits (FX)	1.809.482	20,25	20,97	20,20

Source: CBRT

As we can see the percentage of currency outside banks is only 3,87 in whole M3. Total emission volume is approximately 330 Billion Turkish Lira in September 2022. Practically, with 35 Billion TRY, banking system can manage to create 3,3 trillion deposit money in TRY . On the other hand, foreign currency  deposits are 3,8 trillion and half of the time deposits in TRY is bind to exchange rate of foreign currencies. Currency substitution is too high as 5,3 trillion TRY of M3 is bind to foreign currency (69,7%). We can clearly say that, CBRT can not use the seigniorage right arise from value adds of the domestic economy, efficiently. 

2.2. Possible Effects of Digital Currency on Banking

Defendants of full reserved banking defend that if we deduct the money creation capabilities of banks, the source comes from the seigniorage right could pay the governmental debts fully. But, money is also necessary for credits, not only for payment. Full reserved banking is harmful for financing and banking. So, what will be the effects of digital money on banking is a serious question. Lets’ estimated the possible effects with the specification of central bank’s digital money:

• Everyone will have a digital ledger in the infrastructure to be used for the circulation of the National Digital Currency.
• All kinds of money transactions and movements of money could be tracked by the CBRT.
• CBRT’s digital ledgers will be enough to reserve and use the digital currency for the holders, so they will not need a bank for digitalization of the money, so this will cause difficulties for banks to find demand deposits (low-cost funds).
• The digital national currency that the bank takes into time deposits can only be used as a loan, and there will be no money creation opportunity.
• Banks’ ability to provide financing will be restricted and funding costs will rise.

3. STEPARA (Certified Commercial Electronic Money)

The documents of invention as description, claims and drawings of Certificated Commercial Electronic Money Issuance, Circulation And Refund Method And System Based On The Future Commercial Receivables (STEPARA) is issued in World Intellectual Property Organization pages (Aslan,2020). It is Digital (with specific ID number) Electronic money in accordance with Law No. 6493. It is designed for banking. No resource usage is required for its issuance (Money Creation). It arises due to commercial transactions. Its main function is to increase the turnover rate of working capital. The payback date is fixed. The parties to the commercial transactions determine the repayment date. It cannot be used as a savings tool. It can be fund by either active or passive methods. Passive funding no needs to any monetary funds, it can be funded via guarantee, collateral, bail, insurance, tekaful, cooperative bail etc. On the other hand, active funding depends on the  tied money as time deposit, asset backed securities, Sukuk type of rental certificates, treasury bonds, government bonds, equity sector bonds, cash etc.

Briefly, emission of STEPARA is auto-controlled by the demand. The flows are as follows.

1. The buyer agrees with the bank and delivers the active or passive funds
2. The bank establishes a non-cash limit to the buyer, for electronic money.
3. Buyer and seller agree on due date for the repayment for electronic money funds.
4. Bank issues STEPARA (Electronic Money) and makes payment to the seller on behalf of the buyer
5. The buyer receives the merchandise
6. Until the repayment date, the buyer can use his electronic money in the system as he wishes.
7. If he desires to leave the system before repayment day, he can exchange the STEPARA with cash by profit sharing or rediscount methods.
8. The buyer pays the money back to the bank in cash until the repayment date as the deposit liabilities
9. The bank repays the depositors holding of STEPARA and removes the STEPARA from circulation.

3.1. Design and aims of primary services

STEPARA was designed as a system that issuing electronic money, circulate it and, refunding in cash. It contains three main service those all contains services and subservices those have algorithms to produce conclusions in all level economics.

With its services and sub-services, the Primary Issuance Service maximizes the working capital turnover coefficient by reducing the receivables collection time in the microeconomic field to zero days and reduces the need for resources by increasing capital efficiency.

The Primary Circulation Service provides the financing of trade in the macroeconomic field with its services and sub-services and contributes to economic growth by ensuring that the money issued (emitted) remains in circulation until the repayment date and value-added commercial transactions are carried out. Since STEPARA Emission depends on commercial transactions, its emissions from its own are increasing and decreasing according to economic conditions. Since the results are directly traceable, it therefore allows economic management to intervene in the economy without the use of interest instruments. In addition, system algorithms allow participation (interest-free finance) transactions and sukuk production and tracking. It also causes an increase in tax revenues due to increased operating profitability.

The Primary Refund Service creates benefits in the field of Public Economy (Finance) with its service and sub-services. By removing STEPARA from circulation on the reimbursement date, it transfers to the National Central Bank the right to create money that is supposed to represent the added value generated using SETPARA, thus ensuring that this benefit arises directly in the public sphere. Since this resource can be used for public spending, it can be used as a source for all kinds of policies.

STEPARA designed as a legal currency type for an alternative way of liquidate the receivables to fiat money, checks, bonds, credit cards, baters, assignment, Murabaha type of sukuk etc. It contains beneficiary features while excludes harmful sides these means.

3.2. Relations with Rules of economics, commercial and technical

The definition of Certified Commercial Electronic Money Issuance, Circulation and Refund Method and System Based on the Future Commercial Receivables in the title of our invention is used to emphasize legal and academic limitations and fully describes our invention. In order for the invention to work on the electronic system in order to give benefit and to provide legal results (for example, Article 99 of the Turkish Code of Obligations) Payment function in the article) must be operated in a method that complies with legal regulations. Our invention is designed to include method and system.

Our system can be run in a distributed decentralized database (blockchain-DeFi) or in a centralized (CeFi) database. The software and languages to be used may also be changed or updated independently of the invention. Technical elements will include the software to be developed, relational database, message queue systems, backup, mobile applications. The platforms on which it will operate may be the internet, servers, mobile phones, and future meta-verses or other platforms. Within the framework of legal regulations, it is mandatory to operate the system servers in a way that they are hosted in the country and in two separate places.

STEPARA will be implemented in accordance with the rules of the Law No. 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions, where electronic money is regulated. The law allows electronic money to be issued by the CBRT, banks, Electronic Money Institutions and the PTT. On the other hand, since STEPARA can also be issued using non-cash funding (Guarantee and Collateral Sub Services) methods, the funding authority in this direction is limited to Banks under the Banking Law No. 5411, to Financing and Savings Finance Companies within the scope of the Financial Leasing, Factoring, Financing and Savings Finance Companies Law No. 6361 and to the Insurance Companies within the scope of the Insurance Law No. 5684. However, the STEPARA method is a system that can only be implemented by banks located in the intersection cluster of both clusters. In which business model STEPARA can be implemented is subject to different rules, if the Bank wants to operate STEPARA only by integrating it with its own system platforms, then the System will be operated as a support service in accordance with the provisions of the Regulation on Banks to Receive Support Services. In the event that more than one bank wants to run their own STEPARA on the common system, it can also be operated as an independent system (system operator) in accordance with Article 4 et seq. of the Law No. 6493.

While the Banking Supervision and Regulation Agency (BRSA) was the competent authority for electronic money, this authority has already passed to the Central Bank of the Republic of Turkey (CBRT).  Within the framework of the provisions of the Regulation on the Information Systems and Electronic Banking Services of Banks published in the Official Gazette dated 15.3.2020 and the Regulation on the Operating Principles and Service Model Banking of Digital Banks published in the Official Gazette dated 29.12.2021, the STEPARA system will now be able to serve as an open banking service in accordance with the Service Model Banking.

STEPARA is a digital currency according to today’s legal and regulatory body definitions. It also includes innovation in terms of being a digital currency. In particular, the definition of crypto money to some of the assets that are speculative investment tools that do not fall under the definition of money for advertising purposes also causes confusion. Crypto currencies consist of simple records that cannot be distinguished from others without a serial / identification number and do not carry any function of money. Electronic money, issued in accordance with the legal definition, is a means of payment like national (fiat) money. That is, it has the ability to legally liquidate the debt. The value of electronic money is equal to the value of the national currency in the linked fund. In other words, it can also be defined as stable coin. The main difference between the fiat (physical national) currencies that the CBRT prints and gives to the market and electronic money is electronic money’s being just a record. In other words, electronic money does not have a specific serial/identification number. They are kept as a record. On the other hand, banks are subject to Article 4 of the Banking Law. They have the authority to make payments on record in accordance with the article. Depending on the CBRT’s reserve requirement ratios, banks can also create money by issuing loans on the deposits they collect within the scope of banking activities, this operation called money creation is the basic function for banking and they create financial opportunities by using the money market instrument.

STEPARA’s Certificate Service, on the other hand, gives a unique ISIN code and unique and distinctive ID that allows for independent tracking. In this respect, it also meets all the requirements of today’s digital money concept. The ID numbered money (digital money) feature, is available in STEPARA.

3.3. Solved problems and/or maximized benefits in Economics

The main aim is Turning the stagnation caused by the third-party use of working capital into mobility and increasing the number of jobs that can be done with working capital, via turning the future commercial receivable to a  liquid asset that has the same effect with cash.

For simulation we found the assumptions as follows:

The report issued by Bloomberg, Euler Hermes, Allianz Research indicates that the average due date was 66 days in Global, while it was 83 days in Türkiye, in 2017. In the heat map, in electronics due date increase up to 140 days, but in retail it is only 28 days. Average due date in Germany was 54 days, 50 days in the Netherlands, 43 days in New Zeeland,  51 days in the United Kingdoms. So we can assume 90  days as an average due date in commercial affairs in Türkiye.

We calculate, the gross profit ratio in the collected balance sheets (average of 8721 company) via CBRT  was 13,24 % in 2014, 15i11% in 2015 and 16,17% in 2017. And also 22% in 2017 and 25 % in 2018 average gross profit ratio were calculated over the balance sheets announced in KAP (Public Disclosure Platform) of random ten company listed in XU030 of Borsa Istanbul. So we can assume 20 % as an average gross profit ratio in commercial affairs in Türkiye.

These two indicators shows that with a working capital a trader can turn the capital four times annually and gain 80 percent gross profit ratio. On the other side, In 2018 rediscount rate defined by CBRT was 18,50%. Theoretically a company can rediscount its receivables in to cash with the interest of rediscount rate. We used this ratio for converting STEPARA in to cash.

3.3.1. Micro Economics: Effects on Balance sheet of Company

We randomly selected ten of thirty companies (ARCLK, ASELS, ENJSA, KOZAA, PGSUS, TUPRS, TTKOM, TCELL, TKFEN, PETKM) listed in XU030 of Borsa Istanbul due to calculate the simulation of STEPARA for the effect on balance sheets. Balance sheets were disclosed in the Public Disclosure Platform. The simulated assumption was if the company turns its future receivables in to cash via rediscount rate of CBRT, what would be the cost of STEPARA,  against paid finance costs as exchange losses and interest for financing.

In 2018 the calculations are as follows: (BTRY is used for Billion Turkish Liras)

ARCLK:

Current Position: the time for collection of receivables was 82 days, Turnover speed was 4,4 times annually, gross profit ratio was 32 %, Financial Costs was 4,6 BTRY, ratio of financial costs to gross sales was 55%, profit before taxation was 0, 949 BTRY.

STEPARA Effect: Rediscount costs could have been 1,28 BTRY, advantage could have been 3,38 BTRY, profit before taxation could have been 4,34 BTRY, rise of profit could have been be 357 %.

ASELS:

Current Position: the time for collection of receivables was 79 days, Turnover speed was 4,6 times annually, gross profit ratio was 25 %, Financial Costs was 0,86 BTRY, ratio of financial costs to gross sales was 39 %, profit before taxation was 2,24 BTRY.

STEPARA Effect: Rediscount costs could have been 0,41 BTRY, advantage could have been 0,44 BTRY, profit before taxation could have been 2,68 BTRY, rise of profit could have been be 20 %.

ENJSA:

Current Position: the time for collection of receivables was 49 days, Turnover speed was 7,3 times annually, gross profit ratio was 33 %, Financial Costs was 1,59 BTRY, ratio of financial costs to gross sales was 27 %, profit before taxation was 1,32 BTRY.

STEPARA Effect: Rediscount costs could have been 0,53 BTRY, advantage could have been 1,06 BTRY, profit before taxation could have been 2,38 BTRY, rise of profit could have been be 80 %.

KOZAL:

Current Position: the time for collection of receivables was 0 days, Turnover speed was 1322,1 times annually, gross profit ratio was 61 %, Financial Costs was 0,01 BTRY, ratio of financial costs to gross sales was 1 %, profit before taxation was 1,425 BTRY.

STEPARA Effect: Rediscount costs could have been 0,0003 BTRY, advantage could have been 0,013 BTRY, profit before taxation could have been 1,44 BTRY, rise of profit could have been be 1 %.

PGSUS:

Current Position: the time for collection of receivables was 7 days, Turnover speed was 46,3 times annually, gross profit ratio was 15 %, Financial Costs was 0,40 BTRY, ratio of financial costs to gross sales was 32 %, profit before taxation was 0,54 BTRY.

STEPARA Effect: Rediscount costs could have been 0,04 BTRY, advantage could have been 0,37 BTRY, profit before taxation could have been 0,91 BTRY, rise of profit could have been be 68 %.

PETKM:

Current Position: the time for collection of receivables was 35 days, Turnover speed was 10,4 times annually, gross profit ratio was 17 %, Financial Costs was 2,61 BTRY, ratio of financial costs to gross sales was 165 %, profit before taxation was 1,00 BTRY.

STEPARA Effect: Rediscount costs could have been 0,19 BTRY, advantage could have been 2,42 BTRY, profit before taxation could have been 3,42 BTRY, rise of profit could have been be 241 %.

TKFEN:

Current Position: the time for collection of receivables was 42 days, Turnover speed was 8,6 times annually, gross profit ratio was 15 %, Financial Costs was 0,82 BTRY, ratio of financial costs to gross sales was 46 %, profit before taxation was 1,64 BTRY.

STEPARA Effect: Rediscount costs could have been 0,32 BTRY, advantage could have been 0,52 BTRY, profit before taxation could have been 2,16 BTRY, rise of profit could have been be 32 %.

TCELL:

Current Position: the time for collection of receivables was 46 days, Turnover speed was 7,8 times annually, gross profit ratio was 32 %, Financial Costs was 4,62 BTRY, ratio of financial costs to gross sales was 70 %, profit before taxation was 2,67 BTRY.

STEPARA Effect: Rediscount costs could have been 0,55 BTRY, advantage could have been 4,07  BTRY, profit before taxation could have been 6,74 BTRY, rise of profit could have been be 152 %.

TTKOM:

Current Position: the time for collection of receivables was 75 days, Turnover speed was 4,8 times annually, gross profit ratio was 45 %, Financial Costs was 7,87 BTRY, ratio of financial costs to gross sales was 86 %, loss was 2,02 BTRY.

STEPARA Effect: Rediscount costs could have been 0,89 BTRY, advantage could have been 6,98  BTRY, profit before taxation could have been 4,96 BTRY, there is no need to calculate the rise of profit because of loss in current position.

TUPRS:

Current Position: the time for collection of receivables was 18 days, Turnover speed was 20 times annually, gross profit ratio was 10 %, Financial Costs was 5,56 BTRY, ratio of financial costs to gross sales was 60 %, profit before taxation was 3,72 BTRY.

STEPARA Effect: Rediscount costs could have been 0,96 BTRY, advantage could have been 4,607  BTRY, profit before taxation could have been 8,32 BTRY, rise of profit could have been be 123 %.

3.3.2. Macro Economics: Effects on Profitability and Taxation Base

Our calculations showed that only difference in ten of these companies mentioned above caused mass increase in taxation base of company income tax. It could be interesting to simulate the whole economy that how STEPARA cause difference.

In 2018, the averages and totals of these ten companies calculated as follows:

Gross Profit was 28 %, total profit before taxation was 13,5 BTRY, financial costs were 29,02 BTRY, Rediscount cost with STEPARA could have been 5,17 BTRY, Advantage with STEPARA 23,85 BTRY about 82 %. If these companies used STEPARA to finance their trade, their profit before taxation could have ben 37,35 BTRY. This could have raised the company tax up to 4,77 BTRY. In 2018 collected total company tax was 78,67 BTRT, so with only ten company could have produced 6% more tax for public spendings.

3.3.3. Public Finance: Effects on Financing Public Spendings an Universal Basic Income

In 2018, 20,5 million checks were issued by the traders and 97,86 % these were paid regularly. Total value of these checks were 939 BTRY. This amount corresponds to 195 Billion US dollars (BUSD) at the average exchange rate. Average value of the checks were 45 thousand TRY. Due to 20% average gross profit rate added value with these checks were 39 BUSD. When we assume 800 BUSD gross national product in 2018, check economy’s effect was 5%. Despite the liquidation feature of checks, mostly banks receives the checks as a collateral for loans. So, checks could not been use effectively with, physical other problems. When we used STEPARA instead of these checks, as a money, that can be used as a payment means, in current conditions of Türkiye as average due date is 90 days and gross profit ratio is 20%, the calculations are as follows. We assume that in 90 days money can be turned at least 10 times is so reasonable. So;

Value add would have been 390 BUSD (ten times 39 BUSD). But STEPARA has to be refund at due date, so, money demand could be covered by CBRT via issuing new money, this is the amount of the seigniorage right. Budget value of year 2019 was 170 BUSD. When we cover all public spendings with this created money, 220 BUSD money remains that has to be spent. This is also a serious problem for stability of the value of the Turkish Lira. This remainder source could be distributed between the citizens. When we assume 82 million citizen of Türkiye in 2018, 2.682 USD could be transferred as a share of welfare per citizen. By this way universal basic income could be financeable and applicable with STEPARA.

4. Conclusion

As an answer of  the question if Public Expenditures can be financed tax-free; it has been calculated that 390 Billion USD seigniorage right can be generated by using the digital currency with a certain repayment date instead of a check (7% of the economy). This situation leads to the conclusion that tax revenues are not needed (Budget size is 170 Billion USD in 2019). In this situation, according to Constitution 73, no tax can be demanded.

As an answer of  the question how the digital Turkish lira affects banking; if the identification number is used in the digital currency, the production of fiat money is restricted. Demand for demand deposits will decrease as money can be transferred between digital wallets.

As an answer of  the question how banks should develop financing models in Digital Turkish Lira; the banking sector, whose deposit money opportunities will be limited, has to develop new financing methods over digital money. STEPARA is a convenient tool for this situation.  Banks’ establishing and owning new  electronic money companies are not the solution of obtaining low-cost funds.

As an answer of  the question if financing without resources and interest-free is possible; in the near future, debt settlement without the use of money will become more efficient as the values ​​that can be liquidated will increase. Since simultaneous reciprocal (duplex) transactions will eliminate the concept of indebtedness, since the capital value will be “zero” in the interest calculation, mathematically no interest will arise.

As an answer of  the question if we are ready for the digital cash economy; the digital cash economy is an inevitable phenomenon of the near future. The fact that those who manage digital systems will have big data will increase the importance of personal data and financial privacy. Alternatives to the digital cash economy should be prepared now.

As an answer of  the question if Universal Basic Income (UBI) could be financed in a liberal market economy; the seigniorage right that will arise in the digital money (STEPARA) system we propose is far above the resources required for public expenditures. As the area of ​​use in the economy expands, the seigniorage right increases geometrically. The fastest spending method to prevent the overvaluation of money is transfer spending. It has been calculated that at least USD 2,682 Universal Basic Income per person per year can be distributed.

References

Journals/Periodicals;

Çatlı, M. & Şimşek, S. (2021). DİJİTAL PARA VE EGEMENLİK . Türkiye Adalet Akademisi Dergisi , 0 (48) , 151-184 . DOI: 10.54049/taad.1009216

Kuruç, B. (2016). BRETTON WOODS ANTLAŞMASI’NIN 70. YILI . Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi , Hacettepe University Journal of Economics and Administrative Sciences , 7-26 . DOI: 10.17065/huniibf.309266

Kutval, Y. (2022). FAİZSİZ BİR MERKEZ BANKACILIĞI MÜMKÜN MÜ? İSLAM İKTİSADI LİTERATÜRÜ PERSPEKTİFİNDEN BİR İNCELEME. ESAM Ekonomik ve Sosyal Araştırmalar Dergisi 3 / 1 (Nisan 2022): 39-58 . https://doi.org/10.53662/esamdergisi.1021657

Özkul, F. & Baş, E. (2020). DİJİTAL ÇAĞIN TEKNOLOJİSİ BLOKZİNCİR VE KRİPTO PARALAR: ULUSAL MEVZUAT VE ULUSLARARASI STANDARTLAR ÇERÇEVESİNDE MALİ YÖNDEN DEĞERLENDİRME . Muhasebe ve Denetime Bakış , 20 (60) , 57-74 . Retrieved from https://dergipark.org.tr/tr/pub/mdbakis/issue/54474/684239

Süslü, B. & Baydur, C. (2011). Para İkamesi ve Türkiye’deki Gelişimi . İstanbul Üniversitesi Siyasal Bilgiler Fakültesi Dergisi , 0 (27) , . Retrieved from https://dergipark.org.tr/tr/pub/iusiyasal/issue/608/6119

Tomanbay, M. (2017). John Maynard Keynes’in Yaşamı ve İktisadi Düşüncesinin Gelişimi . Ufuk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi , 6 (11) , 7-16 . Retrieved from https://dergipark.org.tr/tr/pub/ufuksbedergi/issue/57466/815023

Books;

Halm N.G. (1977). Jamaica and Par-Value System, Essays In Internationa Financa No:120, Princeton University, Orinceton,New Jersey

Reports:

Central Bank of the Republic of Türkiye. (2022). Monetary Developments-Semptember 2022, Ankara, https://www.tcmb.gov.tr/,(18.11.2022)

Euler Hermes. (2018). Payment Behavior May 2018. Https:// eulerhermes.com (11.10.2019)

Papers:

Aslan M. (2020). WIPO, World Intellectual Property Organization. WO2020091713 – Certificated Commercial Electronic Money Issuance, Circulation And Refund Method And System Based On The Future Commercial Receivables, Patent Application. Patenstcope.wipo.int

Internet Sources:

BloombergHT. (2021). İsveç Merkez Bankası dijital para çalışmasının ilk sonuçlarını açıkladı. https://www.bloomberght.com/isvec-merkez-bankasi-dijital-para-calismasinin-ilk-sonuclarini-acikladi-2278056 (18.11.2022)

Businesswire.(2022). Members of the U.S. Banking Community Launch Proof of Concept For A Regulated Digital Asset Settlement Platform. https://www.businesswire.com/news/home/20221115005936/en/Members-of-the-U.S.-Banking-Community-Launch-Proof-of-Concept-For-A-Regulated-Digital-Asset-Settlement-Platform (18.11.2022)

Central Bank of the Republic of Türkiye. (2022). Sector Balance Sheet StatisticsAnkara, https://www.tcmb.gov.tr/,(18.11.2022)

European Union. (2009). COMMISSION DIRECTIVE 2009/112/EC. https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:223:0026:0030:EN:PDF

Mevzuat. (2022).For all Turkish legislation. https://mevzıuat.gov.tr

Public Disclosure Platform. (2022). Financial Reports. https://kap.org.tr (18.11.2022)

Public Disclosure Platform. (2022a). Indexes. https://kap.org.tr (18.11.2022)

Risk Center. (2022). Check Statistics, https://www.riskmerkezi.org (18.11.2022)