W3C home > Mailing lists > Public > public-webpayments@w3.org > October 2013

Re: The path forward for Web Payments

From: Joseph Potvin <jpotvin@opman.ca>
Date: Sun, 27 Oct 2013 13:00:43 -0400
Message-ID: <CAKcXiSpgwPqtjknsiTYy3zWoYsQSboN=mhKo0BrEdZJP3pKRZg@mail.gmail.com>
To: David Nicol <davidnicol@gmail.com>
Cc: Web Payments CG <public-webpayments@w3.org>
Further to: "some autonomous exchange rate system for both legal tender and
non-legal-tender fungibles -- beware: that's a very prickly place to be"

The following cc-by-sa & gnu-fdl text is shared here for the web payments
list record, orginally from my Free/Libre Commerce project management

National Authority Over Currency Exchange Rates

Government of a national jurisdiction has the authority to establish and
enforce the method by which its national currency is valued against other
countries' currencies for import/export, forex trading and entirely
internal contracts. A government might or might not exercise that authority
through legislation, but when it does, such a law makes the determination
of exchange rates a controlled Use Case under provisions and authorities of
their civil code. Autonomous choice of transaction currency and of exchange
rate by parties to private contracts is then viewed in their courts as
circumventing the legal requirement to use the national currency as the
medium of exchange at its official rate, thus undermining the sovereign
state's macroeconomic objectives linked with its officially-indexed
exchange rate. Such a determination may or may not be technically correct,
or it may not be felt by all parties to be fair, but it would nevertheless
be enforced strictly or loosely. And in this fuzzy-logic space of civil
code, jurisdictions that do not currently have such laws today can
introduce them tomorrow.
 International Authority Over Currency Exchange Rates

At the international level there exist WTO and IMF rules to challenge
policies or actions "by sovereign states" that are deemed by complaintants
to result in exchange rates distinct from those determined by the
vaguely-specified conventional forex market. One may dispute the assertion
that there exists, except academically, any enforceable WTO or IMF rules in
this space, because none have ever been effectively applied; instead,
informal economic arm-twisting is the usual method for countering exchange
rate manipulation by sovereign states. However a privately-operated
exchange rate system could become used in such volume (by size and/or by
frequency) amongst autonomous businesses that technical or policy updates
to this system may be reasonably deemed to influence the conventional
foreign exchange market (or merely be deemed have the potential to
influence it). Even if this private system attracts only an extremely small
proportion of actual transactions, its influence could be amplified through
the ephemeral mechanism of so-called "market sentiment". As in the previous
section, in the fuzzy-logic space of civil code, at any time new national
or state capital controls legislation could be introduced. Similarly,
long-dormant international trade rules could be brought out of dormancy if
certain sovereign states are accused of permitting persons within their
jurisdiction to manipulate exchange rates.

Joseph Potvin

On Sun, Oct 27, 2013 at 12:33 PM, David Nicol <davidnicol@gmail.com> wrote:

> Well said!
> On Sun, Oct 27, 2013 at 7:54 AM, Joseph Potvin <jpotvin@opman.ca> wrote:
>> All I'm recommending is to ensure that vendors are free to choose whether
>> their prices shall be indexed to the speculative forex market, or to
>> something else, and to provide an API for those choices.
>> For a vendor and a purchaser to have autonomy over their transaction(s),
>> among other things they need to be free to (a) choose their transaction
>> currency(ies), and (b) negotiate their price(s). In multi-currency
>> contracts, the parties must see prices in two or more currencies. They may
>> well agree to externalize inter-currency valuation to an external third
>> party, or instead they can choose to "be the currency market" for the
>> purposes of that transaction. (Have you ever autonomously negotiated
>> inter-currency valuation on a streetcorner or at a hotel front desk in a
>> country with controlled official exchange rates?  The derogatory term is
>> "the black market" for currency. The respectful term is "the free market"
>> for currency.)
> I've discovered that McDonald's Gift Certificates, which are the same
> dimension as US FRNs but on slick paper, can be used for purchasing things
> at businesses other than McDonalds. I wouldn't want to try to buy anything
> real substantial with them, but for a relaxing cup of cafe con leche at the
> corner not-a-starbucks, no problem.
> By handling the whole inter-currency valuation matter this way too, as
>> just one of the variable price indexing options, we can keep everything
>> within the realm of contract law, and steer clear of international trade
>> law which you get into when dealing directly with "exchange rates". Trying
>> to come up with some autonomous exchange rate system for both legal tender
>> and non-legal-tender fungibles -- beware: that's a very prickly place to
>> be. My strong recommendation: keep the whole thing under contracts law. Let
>> vendors control prices for their products and services.
> Recommended: The standard will refrain from promoting any particular
> exchange or listing service, except for purposes of providing examples in
> definitions and explanations.
> Recommended: The standard will include descriptions of features for
> requesting pricing in other currencies within "price request" modules.
> Implementation of these features will be optional and conformant
> implementations need not include them. Conformant implementations that do
> include equivalent features MUST support the described messages and
> responses.

Joseph Potvin
Operations Manager | Gestionnaire des opérations
The Opman Company | La compagnie Opman
Mobile: 819-593-5983
LinkedIn (Google short URL): http://goo.gl/Ssp56
Received on Sunday, 27 October 2013 17:01:31 UTC

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