Currency trading proposal

[J Strobridge]

I see no-one has responded to this yet.  What do folk think about the
proposal?    In the UK it is extremely difficult to exchange small sums
of foreign money - either the exchange is refused outright (such as
International Money Orders which neither the post office nor the Bureau
de Change will touch and the bank will charge around 8.00 pounds to
convert) or you pay huge conversion charges equal to the amount invoved.

There was a recent exchange I did where it would have been much easier
if the US person could have paid the Person In Charge in the States in
dollars and I could have have been paid in pounds at this end.    It
would help the Hawkwind Passport side of things for folk in the States
as well.

I wondered what would happen if one person accumulated a *very* much
larger amount of payments than the other person but I am assured that
any equalisation necessary could be easily done by an exchange of CDs.

However it will definitely need two people we can all get in touch with
easily - and reliably!   Anyone want to volunteer?

jill

================================
M Holmes writes:

> This problem has been around a while. I've got around it personally by
> using my book account in the US as a bank account. The problem being
> that the liquidity of the account is lessened by it only being
> convertible to books, though that seems to happen to a lot of my money
> anyway.
>
> The principle is reasonably sound however and with the willing
> cooperation of two good folks on this list, one on each side of the
> Atlantic, could be extended to everyone.
>
> It'd obviously be better if the currency du jour was CD's rather than
> books, given the interests of folks here, though with carefully selected
> compan(ies) it might be possible to cover both.
>
> How it might work:
>
> 1) the simple method:
>
> Each of the two people have a bank account. When anyone wants something
> from the other side of the pond, they send a cheque to the person on
> their own side of the pond in their own currency. That gets put into the
> designated account. The person on the other side of the pond then sends
> out an equivalent cheque in the other currency to fulfill whatever order
> has been arranged by the foreign buyer. The calculated cost to the buyer
> would be at the prevailing exchange rate plus something to cover the
> postal cost of sending a cheque at the other side, plus maybe a little
> extra of which more later.
>
> What this means basically is that the two designated bankers will have a
> balance owing between them either one way or the other. In an ideal
> world this would never get too far out of kilter. If it did, then some
> form of transaction would happen to temporarily redress the balance.
>
> This could involve cheques, which would incur the occasional transaction
> cost. There might also be adverse movements in currency which would have
> to be borne by one or other of the bankers. The Little Extra on each
> transaction would be calculated to cover such costs. Given bank charges,
> it would be easy to do this and still save everyone a lot of money in
> the long run.
>
> 2) The other way:
>
> Instead of bank accounts each banker has an account with a CD (and maybe
> books as well) company (preferably one(s) which take online orders).
>
> The first advantage of this is that to rederess out of kilter balances,
> one banker can simply order CD's at his end of the pond at the request
> of the other banker to rebalance the deficit. The bankers would
> therefore preferably be people who already tend to look for stuff from
> the other side of the pond. This saves on currency charges even for
> rebalancing the accounts, and on the foreign orders of the bankers.
>
> This would also mean that where the company itself held stock of the CD
> required by the buyer, it could be ordered from the foreign distributor
> and paid into the account of the domestic one.
>
> The companies would be chosen for their likelihood to carry the sort of
> stock required , thus saving the sending of cheques to other companies
> when they didn't. Those companies woud have to be willing to hold an
> account for the banker concerned, but given the likely trade generated,
> that oughtn't to be a problem. It would also be preferable if they had a
> personal enough relationship with the banker to be willing to send CD's
> out to an address other than that of the banker (otherwise it would
> involve repostage by the banker), which is stretching the rules if the
> account were backed by a credit card.
>
> And of course it would be necessary for the two bankers themselves to
> trust each other, and be trusted by everyone else.
>
> There would probably in this case need to be some extra on each
> transaction to cover CD's going missing. They could then be reordered.
> That would amount to insurance pooling between members of the list. The
> other option would be that non appearance of ordered CD's are just a
> problem between the buyer and the distributor. However the existence of
> the banker account with the company would perhaps put them in an awkward
> position where the insurance pooling would protect them.
>
> Anyway. That's how it might work. I'm pretty sure that it could
> relatively easily be set up by the second method in a way that would be
> least hassle for the two bankers.
>
> I'm willing to be one banker. I'm sure I've traded with enough people to
> garner a vote of confidence (noting of course that Keith has two CD's
> which appear to have gone missing and that I will honour if necessary)
> in my honesty. I'd hope that Andy Garibaldi would establish the
> necessary account at C&D for me since it would almost be easier given
> the amount I already buy there.
>
> What would be needed to try this is someone at the other end who
> regularly wants Brit stuff anyway, and who can get an account with one
> of the US dealers. And of course the interest of others from the list of
> running such a system.
>
> Over to you guys....
>
> FoFP
>
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J.D.Strobridge at ed.ac.uk                         eset08 at holyrood.ed.ac.uk
                                                ELIJSA at srv0.arts.ed.ac.uk
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