Most colonies issue and use their own currencies. On worlds that are politically united and economically integrated there is usually a single currency. Politically fragmented worlds, especially those with several recognised colonies on them, usually have one currency for each colony. But of course there are bewildering arrays of exceptions. In some colonies there are multiple competing private currencies, or multiple competing currencies issued by different parts of the government. Some colonies that are poorly globalised and do not constitute economically optimal single-currency areas issue multiple currencies for different areas and allow free exchange between them at floating conversion rates. Some use a circulating specie (currency made out of precious materials) and some use a bullion standards (currencies “backed” by government reserves of precious commodities). Many of the poorer colonies use commodity money, or credit economies settled in specified commodities. On Tau Ceti each of the eight colonies issues écu as a fiat currency: the cash has an obverse specific to thecolony that issued it and a reverse specific to the denomination, but there is no distinction made in accounting balances or financial instruments, issues of cash are controlled by a single inter-governmental board, and all the notes are “printed” in the same factory. No-one else can figure out why Tau Ceti does it that way.
From all that confusion, what a relief to turn to the simple sanity of Imperial crowns.
The currency issued by the Empire is the Imperial crown. The Empire doesn’t collect taxes, so Imperial crowns are effectively backed by the fact that they are what you need to pay interstellar fares and freight, and to buy land on new worlds. Fares and freight rates are set by the board of Imperial Spaceways, land prices through auctions — the steady growth in interstellar traffic (driven by population growth, economic development, and spatial expansion) has combined with technological improvements lowering the cost of spaceship performance in such a way that freight and fares have actually fallen over the last century, but Imperial servants’ salaries and the price of consumer services and commodities in Imperial Direct Jurisdiction have been kept constant.
Exchange rates between the Imperial crown and various colonial currencies varies for all the usual reasons, but the general trend is that the the Imperial crown is at purchasing-power parity with the Tau Cetian écu One crown exchanges for about 2.65 écu, and €2.65 will buy about the same bundle of consumer commodities and services that ₢1 will buy. Iteran exu are another currency at purchasing power parity with the Imperial crown. For other currencies, the trend is for the real exchange rate¹ to fall exponentially with development level²: each +0.5 to DL reduces the exchange rate¹ by a factor of 0.84, +2 to DL doubles the exchange value of one hamburger-worth of the local currency.
SNIPPED: Digression on the small-country model of international trade and the prices of imports and local products in Flat Black, and the importance of the transport being provided by a DL 8.5 economy, snipped.
The Empire issues Imperial crowns and uses them to buy colonial currency and financial instruments. It then spends the local currency on the colonies where it is current, buying components and supplies for its spaceships, buying things to ship to other colonies and use in its aid programs, and buying local materials and hiring locals to work on its aid programs. Imperial servants are paid in Imperial crowns, and with part of their salaries they buy imports, or buy foreign exchange to pay their expenses in the colony they live and work in. That’s the supply of Imperial crowns to the foreign exchange markets.
Colonials buy Imperial crowns on the foreign exchange markets, and use it to pay freight and fares, to buy land on new settlements, and to use as a reserve and store of value³.
Some colonies use Imperial crowns as their local currency. New settlements start out using a lot of crowns, because immigrants bring spare value in cash and tend to be initially suspicious of the local valuta that the provisional governments supply. Other colonies where either Imperial aid expenditures are a large proportion of the economy, or where the monetary authorities⁴ are too inept to provide a functional medium of exchange Imperial crowns become the de facto medium of exchange⁴ or even de jure legal tender.
Most Imperial crowns exist only as accounting balances. Imperial servants expenditures in IDJ are paid by digital funds transfer, financial institutions buying crowns for use in international trade accept credits to their balance at the Universal Bank. Imperial Spaceways and Eichberger Realty accept digital funds. But cash is printed.
Denominations less than one crown are produced as round tokens similar to coins, in values of one mill, five mill, one cent, five cent, one dime and five dime. The tokens are built up of layers of hard transparent material with different and varying refractive indexes⁵ and tints, producing distinctive and striking appearances through interference effects: the tokens are three-dimensional holograms that present different three-dimensional images in different directions. One side shows a sequence of busts morphing from the face of Tomitomo Eichberger through the succeeding emperors to the current emperor as you tilt it up and down, the image turning as you turn it side to side in such a fashion that it looks as though the bust is staying still as the coin turns. There is a bit of text that counter-rotates out of the plane of the token, and changes colour as the token is tilted. There is a background pattern at optical infinity: red in one mill tokens, yellow in five mill, green in one cent, cyan in five cent, blue in one dime, and magenta in five dime coins. The other side shows a golden acorn when seen front on, that grows into an oak tree that blossoms⁶ and sets golden fruit as you tilt the coin, but differently as you rotate the angle of view. The denomination is superscribed so that it appears to be in front of the face of the token. At optical infinity behind the image is a background coloured the same as the other side, with the text of the Imperial Currency Act section on the penalties for forgery written on it. The tokens are all different sizes ranging from the one mill (16 mm wide and 1.2 mm thick) to the five dime (32 mm wide and 2.5 mm thick) in successive 9% increases in linear scale. The edges are not upset, but they are milled, with a palpably different milling on each denomination (for the convenience of users with visual impairments). The surfaces of the two faces are embossed with the denomination in Braille. These tokens are difficult to forge convincingly at low tech levels.
Denominations of one crown and above are issued a rectangular notes of a tough composite film with a palpably distinctive surface texture that makes, faintly, a distinctive sound as you rub it between your fingers. The notes have transparent sections and white-light-hologram sections, and are printed with intricate designs that change depending on the viewing angle through being printed in inks that reflect various colours at different angles. (These look weird when the notes are bent; schoolboys make jokes.) They have fluorescent inscriptions that are characteristically different under different illuminants. They have optical fibre logic embedded in the material that can be cryptographically interrogated by “fake-meters”. When you gently tug the ends of a note it produces a flash of luminescence of a colour characteristic of the denomination. The notes are 66 ⅔ mm wide; their length ranges from 135mm for the ₢1 to 161mm for the ₢100 in steps of 3%. Each note is 1/1000 times as thick as it is long (contributing to a distinctive feel of the denominations between the fingers). Denominations are distinguished by a tactile feature near the edges, for the convenience of users with visual impairments.
The artwork on notes of the Imperial crown is intricate, with patterns at different scales limned in subtly different tones, shades, and hatchings. Each denomination of notes has a very obvious and distinctive main colour, as follows:
|₢1||135 mm||red & maroon||red|
|₢2||139 mm||cyan & teal||orange|
|₢5||143 mm||orange & tan||yellow|
|₢10||147 mm||blue & navy||green|
|₢20||152 mm||yellow & olive||cyan|
|₢50||156.5 mm||magenta & violet||blue|
|₢100||161 mm||green & bottle green||violet|
The purchasing power of one crown in Imperial Direct Jurisdiction is called one Standard Value Unit (¤1). It is approximately the price a a meal at a fast-food restaurant —say, of a Big Mac, regular fries, sundae, and regular drink at McDonalds. The purchasing power of ₢1 in a colony can be considerably higher owing to real exchange rate effects: eleven times as much on Surikate, for example.
¹ Like all economists, I do exchange rates backwards. The exchange rate on a colony is the price of foreign exchange (i.e. Imperial crowns) in the local currency, not the value of the local currency in foreign exchange.
² In my hidden modelling the development level is a continuous variable.
³ Imperial crowns are only a good store of value because interstellar freight rates and fares are slowly declining. Their exchange values tends to rise in declining economies and fall in advancing ones.
⁴ Or standard of value. There are some economies with low development and high trust where Imperial crowns are treated as the commodity currency in a credit economy with settlement in crowns.
⁵ I think of it as variously-doped corundum, but I’m not going to stand by that if it turns out to have technical shortcomings.
⁶ Artistic licence.