THE NATURE OF CURRENCY NOTESIn the course of money functioning, regardless of the commodity acting as a common equivalent, its notes sporadically emerge in the form of monetary liabilities and bonds. A monetary liability is a security establishing its issuer’s liability to exchange the note for a predetermined amount of money (those are commercial drafts and classic banknotes, which are a drafts for a banker). A bond is a security establishing its issuer’s liability to exchange it for a commodity worth a predetermined amount of money (those are gift certificates and bonus money assigned to loyalty program members). Thus, monetary liabilities and bonds are nominated in money, but the former are redeemed with money, and the latter with commodities.
The main purpose for currency notes is the necessity of credit in capitalist economy. For instance, by signing a commercial draft, a customer obtains a commodity today for a promise to provide money in the future. A gift certificate’s seller gets their money today in exchange for the promise to provide the commodity later. However, currency notes do not stay in the creditor’s hands as mere credit tools, they start traveling from one hands to another, i.e. in fact they circulate along with money, thus starting functioning as money themselves. Whatever money product is the basis for a system, distribution of notes thereof is an objective regularity of economic behavior.
Any commodity may in fact become money. Certainly, if the commodity, say, a prepaid single-purpose card like a petrol station card or mobile communication card, is used for the intended purpose, its manufacturing should not trouble monetary authorities. However, if market agents, regardless of the manufacturer’s and the authorities’ intent, start using it as money, the authorities will have to pay their attention to it.
“MOBILE MONEY” AS CURRENCY NOTESMobile company bonds may be used as money. Circulation of mobile operator bonds may take two forms, as circulation of top-up cards and as movement of assets through accounts of the subscribers.
There also is a specific intermediate state, when the same security may act as a bond for one owner and as a monetary liability for another. Money at the mobile account are bonds for the subscriber (as they are the operator’s liability to provide the commodity, i.e. communication service, for a particular sum of money). A seller who accepts those assets from the subscriber’s account as payment for the commodities provided, and who can convert it into money with the mobile operator, those assets are monetary liabilities. This could compare to a gold bar standard, when national currency was credit money only for those who could redeem it with a sum sufficient to obtain a standard gold bar. For the rest, the currency was fiat, i.e. they could not redeem it with gold with the issuer.
As for 'mobile money’ like M-PESA, which exists as records in accounts of Safaricom’s subscribers, it is monetary liabilities, not Safaricom’s bonds. In that case, a subscriber’s account splits: along with bonds in the account, there are also monetary liabilities which the operator undertakes to redeem with money, not mobile services.
