Embed Notice

Tax

‘A’ is an economic actor with a tax obligation.

(Without tax there is no need for the currency.)

1. A instructs its commercial bank to settle their tax obligation
2. A’s commercial bank:
- debits A’s bank account by £X of *commercial bank money*
- debits £X of *base money* from its own Central Bank Reserve Account (CBRA)
3. Central Bank instructs the goverment’s tax office to settle A’s tax liability

Outcome:
the money supply has *decreased* by £X