Arizona Law Takes Another Step to Support Sound Money
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Last week, Arizona Gov. Doug Ducey signed a bill into law that takes another step toward establishing gold and silver as money. The new law supplements Federal Reserve notes with honest money that has stable, constitutionally protected value.
Rep. Mark Finchem (R-Tucson) introduced House Bill 2013 (HB2013) on Jan. 9. The new law recognizes silver and gold as liquid capital for trust companies.
Practically speaking, the bill does two things.
- Modifies the definition of “liquid capital” to include legal tender for trust company certification. (Sec. 1)
- Defines legal tender as a medium of exchange, including specie, that is authorized by the U.S. Constitution or Congress for the payments of debts, public charges, taxes and dues. (Sec. 1) Specie is defined as coins having precious metal content.
Trust businesses act as “fiduciaries.” A fiduciary is a person who holds a legal or ethical relationship of trust. Typically, a fiduciary handles money or other assets for another party. A trust company in Arizona must maintain $500,000 of liquid capital reserves in order to operate. The bill would allow trust companies to count gold and silver specie as part of their liquid capital.
Under the current law, liquid capital is defined as capital in the form of certificates of deposit issued by banks, savings banks or savings and loan associations that do business in Arizona. These certificates of deposit are insured by the FDIC. HB2013 expands the definition to include gold and silver. Finchem explained the impact of the bill.
This would fortify the capital asset reserve of trust companies in Arizona. Since the FDIC only insures up to $250,000 of personal deposits in an FDIC insured bank, and they can take up to 99 years to pay a claim under federal law, this move permits investors in trust companies to place hard assets on deposit as ready, liquid capital reserve without converting the real money to fiat currency and then digital currency as in a deposit in the ACH system.
From a broader perspective, the passage of HB2013 recognizes hard money as a legitimate risk reducer. It also expands the role of gold and silver as money in Arizona, and further undermine the Federal Reserve’s monopoly on money.
Last month, the House passed HB2013 by a 33-24 vote. On March 14, the Senate approved the measure 17-13. Gov. Ducey signed the bill into law Friday. It will go into effect 90 days after the legislature adjourns sine die.
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