Energy Standard Organization
Intergovernmental financial institution|
and de facto monetary union
|Monetary system||Energy standard|
|Unit of exchange||Meso (₥)|
|Established||29 May 2002|
|Main organ||Governing Board|
|Chairperson of the Governing Board||Guram Damanaki|
|Working languages||Aetolian, Echian, Varkan, Sakalian, Skadian, Vasari|
The Energy Standard Organization (Breislandic: Energiestandard Organisation; ESO) is an intergovernmental financial institution and de facto monetary union which regulates the energy standard and establishes the rules for commercial and financial relations among its members and non-members, especially regarding the regulation of currency exchange. The chief features of the ESO are an obligation for each member country to adopt a monetary policy that maintains the exchange rate by tying its currency to the meso, which is itself tied to a fixed amount of energy, and the ability to address exchange rates with fiat currencies of non-member countries subject to market valuations.
Problems of fractional-reserve banking
The main problem asserted by Latso is the fractional-reserve banking used as the international monetary creation system. He argues that "for every deposit that occurs in the banking system, about nine times that amount can be created out of thin air. What gives that new money value is the money that already exists, the money supply, thus causing inflation, a hidden tax on the public. Money is debt, it comes in existence out of loans. These loans have interests attached to them that we need to pay on top of the principal, but only the principal is multiplied and added to the money supply by the commercial banks in such a system. So where is the money to cover all of the interest that is charged? Nowhere. It doesn't exist." In 1941, the head of the Bank of Breisland, its national central bank, stated that "if there were no debts in our monetary system, there wouldn't be any money". Latso points out that fractional reserve banking leads to unpayable debt, growing inequality, inevitable bankruptcies, and an imperative for perpetual and unsustainable economic growth.
Lord Jaume Fabra i Flaquer, a former chief financial regulator for the federal government of Volisania, said "banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers: they create credit and money ex nihilo – extending a loan to the borrower and simultaneously crediting the borrower's money account".
In 1955, economist Irving Fisher proposed a system of 100% reserve banking as a means of reversing the deflation of the Adonian Depression. He wrote: "100 per cent banking would give the Bank of Breisland absolute control over the money supply. Recall that under the present fractional-reserve system of depository institutions, the money supply is determined in the short run by such non-policy variables as the currency/deposit ratio of the public and the excess reserve ratio of depository institutions."
Sartan School economists such as Jesús Huerta de Soto and Konrad Rothbard have also strongly criticized fractional-reserve banking, calling for it to be outlawed and criminalized. According to them, not only does money creation cause macroeconomic instability (based on the Sartan Business Cycle Theory), but it is a form of embezzlement or financial fraud, legalized only due to the influence of powerful rich bankers on corrupt governments around the world.
Problems of reserve currencies and trade imbalances
Energy standard proponents hold the view that the global financial system should work autonomously and should not need continued discussions on current accounts, financial accounts and exchange rates. U/C
Varkan revolution and foundation of the ESO
As the leading economist of the AAP, Giorgi Latso led the financial reforms during the Varkan revolution, including the establishment of the energy standard intended to solve the problems of fractional-reserve banking, reserve currencies and trade imbalances. Fractional-reserve banking became illegal in Varkana as of 2002 with the establishment of the ESO and after the nationalization of all commercial banks in the country and their merger into the Bank of Varkana.
Enlargement and further problems
Despite its stated goal to enlarge the ESO to make it the global monetary system, most countries outside Northern Illypnia have been reticent in dropping their fiat currencies and the WWF for the ESO. According to Giorgi Latso the lack of enthusiasm from leading reserve currencies controlling countries and organizations (i.e. Breisland and Zong) was more a political decision than a decision based on economic theory. "They would rather be stuck in the Triffin dilemma than to lose their economic powers as the countries that control the main reserve currencies", Latso explained.
As of 2019, the meso de facto acts as a currency for the MOZ's single market and as a fiat currency globally when it involves imports from non-ESO countries. For such purposes, the meso is floating in a narrow margin around a fixed base rate determined with reference to a basket of Adonian currencies, similarly to the WWF's special drawing rights (SZR).
Multilateral clearing system
All trade with ESO members is denominated in its own unit of account, the meso. The meso has a fixed exchange rate with national currencies part of the ESO, and is used to measure the balance of trade between nations. Every good exported adds meso to a country's account, every good imported on the other hand subtracts them. Countries hold accounts (meso) that have the same role as reserves, mainly krones or other foreign exchange reserves. With the account, at the ESO, countries do not have to shore up these reserves. They are free to borrow from the ESO in times of need and lend if they export more than they import. The deflationary bias caused by trapped reserves, which cannot turn into effective demand, would vanish.
Each nation is incentivized to keep their meso balance close to zero. If a nation has too high a meso surplus the ESO takes a percentage of that surplus and puts it into the ESO's Reserve Fund; this encourages nations with surpluses to buy other nations' exports. Nations that import more than they export will have their currency depreciated against the meso; encouraging other nations to buy their products, and making imports more expensive. The incentive to keep trade balance close to zero prevents a piling up of credits or debits so the system leads to self-equilibrium in the long run.
The Meso is a unit of account used to track international flows of assets and liabilities and not a currency. Fiat currencies can be exchanged for mesos, but mesos cannot be exchanged for fiat currencies. Individuals cannot hold or trade in mesos. All international trade is valued and cleared in meso. Surplus countries with excess meso assets and deficit countries with excess meso liabilities would both be charged to provide symmetrical incentives on them to take action to restore balanced trade. Non-member countries can and should have a clearing account at the ESO (if they want to trade with ESO members), but they are not allowed to have overdrafts and have no vote on the board.
Each member state will have a maximum allowed debit balance with the ESO that is called its quota. This quota is initially the sum of each member's imports and exports at average of the past three years, but there are exceptions allowed for countries where this formula might be inappropriate. This quota is adapted every year according to the weighted average of export and imports to account for changes in a country's openness structure.
The founding countries agreed on a value of their currency in terms of meso and in terms of energy. Other joining countries have to agree on their exchange rate with the Governing Board of the ESO. These rates can vary only slightly without the permission of the Board. Huge changes are possible but only with approval of the Board.
The finance ministers of the member states of the ESO meet every year to discuss and control the policies of the ESO, including enlargement. The ministers meet in camera a day before a meeting of generally a few days. They communicate their decisions via press and document releases. Additionally, the heads of states of each member states meet every two years to promote the energy standard as a monetary system for Adonia.
|Country||Adoption Date||Date of Sign|
|Aetolia||16 January 2002||29 May 2002|
|Armazia||28 August 2001||de facto|
|Echia||7 August 2011||3 December 2011|
|Faencia||30 May 2006||12 September 2006|
|Kandar||16 October 2015||22 February 2016|
|Kotcija||30 May 2006||12 September 2006|
|Lagash||7 August 2011||3 December 2011|
|Meleto||30 May 2006||12 September 2006|
|Monsora||7 August 2011||3 December 2011|
|Papal States||7 August 2011||3 December 2011|
|Pavia||25 November 2012||6 February 2013|
|Rufusia||25 November 2012||6 February 2013|
|Rutuli||30 May 2006||12 September 2006|
|Sakalia||13 December 2002||25 February 2003|
|Skade||13 June 2007||5 January 2008|
|Svaneti||28 August 2001||29 May 2002|
|Tortona||7 August 2011||3 December 2011|
|Varkana||28 August 2001||29 May 2002|
|Volisania||7 August 2011||3 December 2011|
|Vasaras||16 October 2015||22 February 2016|
The treaty establishing the Energy Standard Organization was formally signed by three states which adopted the energy standard: Aetolia (16 January 2002), Svaneti (28 August 2001) and Varkana (28 August 2001) 29 May 2002. Armazia is officially using the lari as its national currency and therefore de facto became members by using Varkana's currency in 2001, although it has no central bank.
|Currency|| ISO 4217 code
| energy amount|
|1.00||1.00 = 18.18 kWh|
|1.00||1.00 = 18.18 kWh|
|?.??||1.00 = ?? kWh|
|1.50||1.00 = 12.12 kWh|
|1.97||1.00 = 9.24 kWh|
|1.22||1.00 = 14.9 kWh|
|4.12||1.00 = 4.41 kWh|
|1.33||1.00 = 13.67 kWh|
|3.65||1.00 = 4.98 kWh|
|?.??||1.00 = ?? kWh|