Is a Stable Financial System Possible?

Three conditions are suggested for establishing a stable financial system: 1. Only digital money is used. 2. The Internet of Things (IoT) uses a sustainable service of nature essential to maintain the well being of the environment and humans in each region of the planet to automatically establish an index for determining the value of money in each region. 3. Currencies are only used as medium of exchange and not also as a unit of value nor a store of value. It is recommended that trialling these conditions be initiated to also provide alternatives facilities in a financial crisis that some commentators are anticipating.Some Central Bankers have recognised that the current system is not optimal. A fundamental problem is that value of all official forms of money has become self-referential. The interdependency of currencies means that central banks have lost their independence with a crisis in one currency able to infect another. No official currency can have its value defined by any one or more real things. This disconnect between the value of money and reality means that there is no rational basis for believing that market prices can allocate resources efficiently, let alone sustainably. “The Big Mac index was invented in 1986 by The Economist as a light-hearted guide to whether currencies are at their ‘correct' level”. The IoT can provide a more compelling tether of value based on the efficiency of producing renewable energy and dependency on its use in each region.No reliance on block chain technology is required with encryption being a policy option. The tether could be used to define the value of trade and investment contracts on a decentralized basis without a central bank. Contracts insured with licensed third parties would create a medium of exchange with a carrying cost composed of the insurance and self-liquidating payments of the money created. The carrying cost denies money being a store of value or the excessive issue of money