A key objective of the Network is to keep the Quids circulating quickly. It is this ‘velocity’ of circulation that gives us the multiplier effect that eases the liquidity.
It is therefore vital to reward quick spenders and penalise Quid-sitters.
The exact algorithms for this are important in one way but irrelevant in another.
To an economist the ways in which Quids are added into circulation or withdrawn from inactive accounts determines the ‘Quid-supply’ (analogous to M3 money supply) at any one time. This in turn determines the real value of a Quid and whether there is Quid-inflation or not.
There is no direct link between the Quid and the euro – they can not be cashed in or (officially) converted to normal currency. But there is nevertheless need for stability – Quid-accepters dont want to have to keep repricing their services every week. And if for example taxes were indeed payable in Quid then public sector partners would insist on stability.
So it is important to have confidence that the Quid-M3 control algorithms can prevent Quid-inflation and to be able to demonstrate that to the satisfaction of Network-Partners.
To the Quid-user in the street there is also a confidence issue though there is perhaps more time to develop this confidence. The fact that unused Quids devalue over time anyway is helpful because there is a built-in ‘use it or lose it’ factor irrespective of any underlying Quid inflation. So just as the workings of the internal combustion engine are largely irrelevant to most car drivers, what goes on under the Network bonnet is likely to be of limited interest to the average Quid-user.