How Banks Work: Issuing Liquidity From Wealth
Banks don't lend depositor money – they create new liquidity backed by YOUR assets, and charge YOU for it:
You pledge $505,000 home as collateral
Bank creates $380,000 in your account
You pay $286,433 interest over 25 years
If you default, bank seizes your collateral
Banks create liquidity from YOUR wealth and charge YOU interest for the privilege
You might be skeptical. This sounds too simple. Surely banks lend money they already have?
For decades, textbooks taught exactly that. Banks collect deposits, lend them out, and earn the
spread.
In 2014, the Bank of England stated plainly: "When a bank makes a loan, it simply credits the
customer's account. At that instant, new money is created." Professor Richard Werner examined
actual bank accounting during the lifecycle of a loan. No deposits were drawn down. The liquidity
simply appeared.
This is published central bank policy and peer-reviewed research.
Navigate down to see the actual accounting entries – what happens on the bank's books versus a real
lender versus an Alberta Buck issuance. The sub-slides walk through each transaction step by step:
a pension fund lending real cash, a bank creating credit, and a citizen issuing BUCKs.
The fundamental difference is stark: banks create BOTH sides of the ledger from your mortgage
signature. With Alberta Bucks, you create liquidity from EXISTING wealth, without any balance
sheet tricks.
Mortgage Payments: Lender Money
If banks really lent depositor money, here's what the books would look like.
On the left, your mortgage payments flow in over twenty-five years. On the right, the bank pays
depositors from those same flows. The bank's profit is the spread between what you pay and what
depositors receive.
Adjust the sliders to see the effect. At typical rates, the spread earns the bank a modest profit
on money that actually belonged to depositors. This would be a legitimate intermediation service.
But this isn't what happens. The next slide shows what the Bank of England documented.
The Reality: Money Creation
Research by Bank of England 2014, and Werner 2014:
You get a mortgage with your home as collateral
The bank does NOT lend you existing deposits
Your payment stream serves as the bank's Asset
Bank creates new money Liability in your account
Your asset backs the money; bank charges you interest for decadesIf you default, the bank seizes your collateral
Banks create liquidity from YOUR wealth and charge YOU interest for the privilege
Here's what actually happens, confirmed by the Bank of England in 2014 and documented by Professor
Richard Werner through direct observation of bank accounting.
When a bank makes a loan, no bank assets are drawn down. The bank creates a new deposit in your
account by expanding its balance sheet.
Your loan contract is an asset to the bank, backed by a lien against your asset. The amount
deposited into your bank account is a liability. Both are created simultaneously from your
signature and your collateral.
The bank's cost of creating this money is near zero. Yet you pay interest on it for decades.
The next chart shows this visually: your mortgage payments flowing to a bank that contributed no
existing capital.
Mortgage Payments: Issued Money
Now compare. Same mortgage payments on the left. But on the right, instead of depositor payments,
you see the money that was issued: created instantly, backed by your loan contract.
The bank's cost of capital is roughly one percent: overhead and a small risk premium. Everything
above that is profit on money that didn't exist before you signed.
Adjust the cost of capital slider. Even at generous estimates, the bank's profit is enormous
relative to what they contributed. The summary below the chart shows the present value of that
profit.
This is the accounting reality. The bank gained an asset (your loan) without giving up any
existing asset in return.
Three Ways to Finance a Home: Deep Accounting Analysis
Your mortgage contract IS a real asset – like a bond with a payment stream .
Banks can (and do) sell these as CLOs/MBS.
So what's really happening?
For those who want the full accounting, let's compare three ways to finance a home, step by step.
First, a real lender; a pension fund with actual cash. Second, a bank creating credit. Third,
an Alberta Buck issuance.
Your mortgage contract is a real asset, like a bond. Banks sell these as collateralised loan
obligations. So what's the actual accounting difference between lending existing money and creating
new money? The next slides walk through every journal entry.
Cash Lender (Pension Fund Buys Mortgage)
First, a real cash lender. A pension fund has three hundred eighty thousand dollars and lends it
to you.
Watch the books carefully. The fund swaps one asset: cash, for another: your loan receivable.
Total assets unchanged. They had the money first. The money left their possession.
The fund has $380k cash and wants to earn interest by lending it to you.
T0: Contract signed, funds disbursed
Pension Fund Books
Debit
Credit
Loan Receivable
+$380k
Cash
-$380k
Net Asset Change
$0
The fund swapped one asset (cash) for another (your loan). Total assets unchanged.
They had to HAVE the cash first. The cash LEFT their possession.
Cash Lender (Pension Fund Buys Mortgage)
The lender receives your annual payment, recovering their deployed capital, and earning interest
income.
T1-T25: You make payments (~$24k/year)
Pension Fund Books
Debit
Credit
Cash
+$24k
Loan Receivable
-$15k (principal)
Interest Revenue
-$9k (income)
Cash Lender (Pension Fund Buys Mortgage)
Over twenty-five years they earn two hundred twenty thousand in interest. Fair compensation for
tying up real capital. This is genuine intermediation.
T25: Loan fully repaid
Summary
Amount
Total cash received
$600k
Original cash out
-$380k
Net profit $220k interest
The pension fund earned $220k by lending EXISTING money for 25 years.
Bank "Lends" You $380k (Credit Creation)
Now the bank. Watch carefully; no cash is earmarked for your loan.
Step one: the bank records your loan as an asset and an accounts payable as a liability. So far,
identical to the pension fund after signing but before paying.
The bank has no cash earmarked for your loan . Watch carefully.
T0: Contract signed: Werner's Step 1
Bank Books (Step 1)
Debit
Credit
Loan Receivable
+$380k
Accounts Payable
+$380k (bank owes you)
Balance Sheet +$380k +$380k (expands)
At this point, the bank has your IOU (asset) and owes you $380k (liability).
This is IDENTICAL to the pension fund after signing but before paying.
Bank "Lends" You $380k (Credit Creation)
Step two: the bank renames its accounts payable to customer deposit. No cash moves. It's
re-labeling. Your deposit appears from nothing.
T0: "Disbursement": Werner's Step 2: a magic trick
Bank Books (Step 2)
Debit
Credit
Accounts Payable
+$380k
Customer Deposits
+$380k (your "deposit")
Net change $0 $0 (just relabeling)
No cash moved. The bank simply RENAMED its liability from "Accounts Payable" to "Customer Deposit."
Bank "Lends" You $380k (Credit Creation)
Combined effect at T0:
Bank Books (Net)
Debit
Credit
Loan Receivable
+$380k
Customer Deposits
+$380k
Balance Sheet +$380k +$380k
Balance sheet EXPANDED by $380k on both sides. No existing asset was used.
Bank "Lends" You $380k (Credit Creation)
Eventually, you spend your loan proceeds; buying a home, or paying contractors and suppliers to
build one. The money leaves your bank.
If this keeps up, they will need to access their central bank reserves!
T0+: You spend your "deposit" (write cheque to home seller at different bank)
Bank Books
Debit
Credit
Customer Deposits (yours)
-$380k
Reserves (at Central Bank)
-$380k
Reserves leave when your deposit moves to another bank.
Bank "Lends" You $380k (Credit Creation)
But, deposits drawn down at one bank end up being deposited at another bank; on average, they
balance out.
Reserves settle across the banking system in a closed loop.
But on average :
Bank Books
Debit
Credit
Reserves (at Central Bank)
+$380k
Customer Deposits (other borrower)
+$380k
Some other borrower at some other bank just spent their loan proceeds here.
Net reserve change ≈ $0 – it's a closed loop across the banking system.
Key insight: The pension fund needed cash BEFORE lending. The bank creates the deposit FIRST,
then "manages reserves" – which in practice means waiting for other banks' borrowers to deposit here.
Bank "Lends" You $380k (Credit Creation)
No pre-existing capital was deployed, yet the bank collects the same two hundred twenty thousand in
interest. Same as a real lender who has to accumulate and deploy real capital.
T1-T25: You make payments
Same as pension fund – bank collects $600k over 25 years, earns $220k interest.
But Wait – Isn't the Loan a "Real" Asset Being Drawn Down?
But wait, isn't the bank's loan "asset" being drawn down? A fair objection. Your loan contract is
valuable. Banks sell these. So isn't the bank spending a real asset to create your deposit?
No. Look at the accounting. The pension fund gave up cash; an asset decreased. The bank gave
up nothing. It created a liability. The loan asset and the deposit liability are separate entries.
The bank could sell the loan and still have your deposit on its books.
Your loan contract IS valuable – PV of $600k payments at 1% discount ≈ $500k.
Banks DO sell these. So isn't the bank "spending" this asset to create your deposit?
No. Here's why:
Account Type
Pension Fund
Bank
Loan Receivable
+$380k (asset gained)
+$380k (asset gained)
What was given up
-$380k cash (asset lost)
Nothing (liability created)
Net asset change
$0
+$380k
But Wait – Isn't the Loan a "Real" Asset Being Drawn Down?
Both sides were created simultaneously from your signature. The bank's net assets increased. The
pension fund's didn't.
The bank's loan asset is NOT reduced by the deposit liability. They're separate entries.
The bank could still sell the loan (CLO) even with your deposit on their books.
The loan doesn't "back" the deposit in accounting terms – both are created simultaneously from your signature. The bank gained an asset WITHOUT giving up an asset.
Alberta Buck (You Monetize Your Own Equity)
Now the Alberta Buck. You own a home worth five hundred five thousand. You want three hundred
eighty thousand in liquidity without borrowing.
You own a home worth $505k. You want $380k liquidity without borrowing.
Before: Your Balance Sheet
Your Assets
Amount
Your Liabilities
Amount
Home
$505k
Total Assets $505k
Total Liabilities $0
Your Equity
$505k
Alberta Buck (You Monetize Your Own Equity)
You attest the home's value, an insurer places a lien, and you issue BUCKs. Your net worth is
unchanged. But the composition changes: illiquid equity becomes liquid BUCKs plus encumbered
equity.
When you issue BUCKs, it's an asset swap. Your total assets stay the same.
T0: Attest home value, issue $380k in Alberta Bucks
Your Books
Debit
Credit
BUCKs (cash asset)
+$380k
BUCKs Issued
+$380k (liability)
Net Equity Change
$0
Simultaneously: Insurer places LIEN on $380k of your home value.
Alberta Buck (You Monetize Your Own Equity)
You converted illiquid equity into liquidity; your net worth hasn't changed, and your
accounts are in balance.
After: Your Balance Sheet
Your Assets
Amount
Your Liabilities
Amount
Home
$505k
BUCKs Issued
$380k
BUCKs (to spend)
$380k
(Lien to insurer)
($380k)
Total Assets $885k
Total Liabilities $380k
Your Equity
$505k
Your NET WORTH is unchanged ($505k). But the COMPOSITION changed:
Before: $505k illiquid home equity
After: $380k liquid BUCKs + $125k unencumbered equity + $380k encumbered equity
Alberta Buck (You Monetize Your Own Equity)
When you spend your liquidity to buy another asset, your books still balance.
T0+: You spend BUCKs (buy car for $50k)
Your Assets
Amount
Your Liabilities
Amount
Home
$505k
BUCKs Issued
$380k
BUCKs remaining
$330k
Car
$50k
Total Assets $885k
Total Liabilities $380k
Your Equity
$505k
You draw down BUCKs to acquire the Car – an asset swap. Total assets unchanged at $885k.
Alberta Buck (You Monetize Your Own Equity)
Over time, all accounts holding balances of BUCKs pay a small demurrage fee into a fund that
eventually releases the claim on the underlying assets.
T1-T50: Demurrage and Jubilee
BUCK holders (whoever holds BUCKs) pay 2%/year demurrage to Jubilee Fund.
Fund accumulates and pays down liens over time.
Alberta Buck (You Monetize Your Own Equity)
Over the years, this account accumulates. After 25 years, it would pay off half of the claim on
collateral; if you wish to release the asset, you'd have to redeem it by paying the remainder.
T25: You want to release your home (early redemption)
Redemption Calculation
Original BUCKs issued
$380k
Years elapsed
25
Demurrage rate
2%/year
Jubilee credit
$380k × 2% × 25 = $190k
Your redemption cost $380k - $190k = $190k
Your Books (Redemption)
Debit
Credit
BUCKs Issued (liability)
+$380k
Cash (your payment)
-$190k
Jubilee Fund credit
-$190k
Lien released
✓
Alberta Buck (You Monetize Your Own Equity)
Even if your family makes poor financial decisions, all claims against underlying assets are
automatically released after 50 years.
T50: Automatic Jubilee (if you never redeem)
Jubilee Calculation
Demurrage accumulated
$380k × 2% × 50 = $380k
Your redemption cost $0 (automatic)
Lien dissolves. Home fully unencumbered. No payment required.
The Fundamental Difference: What Existed Before?
Here's the summary table. Three approaches, side by side.
The pension fund started with cash and exchanged it for a loan. Balanced books, real
intermediation.
The bank started with nothing and created both sides from your asset. Your collateral backs
the money. The bank contributed an accounting entry.
The Alberta Buck starts with existing equity and converts a portion to liquid form. Your assets
backs the money. You books remain in balance.
The bank takes a claim on your asset, creates two new unbalanced accounting entries and rents you the newly
issued liquidity at interest.
With Alberta Bucks, you create balanced accounting entries (just like the pension fund), and release
the trapped liquidity from your own asset.
Question
Pension Fund
Bank
Alberta Buck
What asset existed before?
Cash ($380k)
Nothing Home equity ($505k)
What was given up?
Cash
Nothing Unencumbered equity
What was created?
Loan receivable
Loan + Deposit
BUCKs (money)
From what source?
Existing wealth
Your signature Existing wealth
Who bears the cost?
Fund (opportunity)
You (interest) You (insurance)
What backs the money?
Fund's cash
Bank's IOU Your home equity
The bank creates BOTH sides from your signature – nothing existed before.
You create liquidity from EXISTING equity – your wealth backs the money.
Alberta's Third Option
You Own the Wealth. Why Must You Borrow to Use It?
When you need liquidity, you have two options: sell your assets or borrow against them.
Banks have a third option – for themselves : create liquidity directly from assets.
BUCKs give that third option to you .
Entity
Creates Liquidity?
Pays Interest?
Risks Assets?
Bank
Yes (backed by your asset)
No (issues liquidity)
No (Lien on your asset)
You
No Yes Yes (home foreclosure)
Wealth currently flows from asset owners to bank liquidity issuers – the Alberta Buck ends this .
The technology exists. The question is whether Alberta's banks lead this transition – or get left behind.
Look at the table. Banks can create liquidity. Citizens and businesses cannot. That asymmetry
is the entire problem.
When you need purchasing power, you have exactly two options. Sell your asset, or borrow against
it; pay interest for decades and risk foreclosure if anything goes wrong.
Banks have a third option. They create liquidity directly from assets they hold claims on. No
borrowing needed. No interest paid. They simply expand their balance sheet.
Why can't you do the same thing with your own asset?
Historically, the answer was infrastructure. You needed a trusted ledger, verified attestation,
enforceable insurance. Only banks had that infrastructure.
Now the technology exists. Blockchain provides the ledger. Smart contracts handle attestation.
Parametric insurance manages risk. The infrastructure barrier is gone.
BUCKs give citizens the third option. That's what fiscal autonomy means: the ability to access
your own wealth's value without asking permission from someone who charges you for the privilege.
But this isn't just about citizens. Alberta's banks face this transition too. Stablecoins are
already draining deposits from the banking system. The closed-loop reserve system that let banks
create money at near-zero cost is breaking.
Navigate down to see why this transition is inevitable, and how Alberta's banks can lead it rather
than be disrupted by it.
The Illusion of Bank Reserves
"But banks need reserves." True: for settlement. But in a closed banking system, if all banks
create credit roughly equally, deposits flowing out approximately equal deposits flowing in.
Bank One's borrower spends to a client at Bank Two. Bank Two's borrower spends to a client at Bank
One. Net reserve movement: approximately zero. It's a closed loop. Banks don't draw down reserves
in normal operations.
This matters because it explains why banks can create money at near-zero cost. The reserve
requirement isn't a meaningful constraint when the system is in balance.
But what happens when deposits start leaving the banking system entirely?
"Banks need reserves to settle when deposits leave"
In a closed banking system: If all banks create credit roughly equally,
deposits flowing OUT ≈ deposits flowing IN. Net reserve movement ≈ zero .
Bank One Action
Bank Two Action
Reserve Movement
Creates $380k loan
Creates $380k loan
Deposit spent → Bank Two
Deposit spent → Bank One
Loses $380k reserves
Loses $380k reserves
Gains $380k from Bank Two
Gains $380k from Bank One
≈ $0
Banks don't "draw down" reserves in normal operations – it's a closed loop.
Stablecoins: Breaking the Closed Loop
Stablecoins break this closed loop. When you buy one hundred thousand in Tether, your bank deposit
leaves the banking system entirely. Tether buys Treasuries. No offsetting deposit returns.
It's a one-way valve: deposits exit, and never come back. The closed-loop reserve system that let
banks create money without needing reserves starts to fail.
This is already happening at massive scale. Over one hundred eighty billion dollars has migrated to
stablecoins. Tether already processes more daily volume than Visa, and this trend is only going to
increase.
When you buy $100k USDT, your bank deposit leaves the banking system entirely .
Step
Bank System Effect
Tether Effect
You send $100k to Tether
Deposit disappears
Receives $100k
Tether buys Treasuries
$100k leaves banks
Earns yield
No offsetting deposit
Net drain: -$100k No reserve required
Stablecoins are a one-way valve: Deposits exit the banking system, never return.
The GENIUS Act
The GENIUS Act in the U S legitimises stablecoin issuers; entities that drain deposits, don't hold
traditional bank reserves, earn (and pay) yield on backing assets, and compete for deposits without
banking costs.
The CLARITY Act was blocked because stablecoin issuers want to offer yields. If stablecoins pay
interest, they become strictly better than bank deposits.
This is the regulatory writing on the wall. The closed-loop system that enabled bank money creation
is being dismantled by legislation.
Alberta's banks need a strategy for this new world.
The GENIUS Act legitimises entities that:
Drain deposits from banks (no offsetting inflow)
Don't hold reserves (unlike banks)
Earn yield on backing assets (Bonds, gold, BTC)
Compete for deposits without banking costs
CLARITY Act blocked because stablecoin issuers want to offer yields .
If stablecoins pay interest, they become strictly better than bank deposits.
Scuttles the closed-loop reserve system
that let banks create money without needing reserves.
The Inevitable Transition
The transition from extractive lending to infrastructure services is inevitable. Stablecoins,
DeFi, and tokenised assets are exposing the old model.
Alberta's banks face three options. They can lead the transition: partner on Alberta Buck
development and earn new revenue from custody, attestation, and insurance administration.
They could resist: lobby against citizens accessing liquidity, and perhaps gain a temporary reprieve.
Or they could just ignore it all, and watch deposits drain to stablecoins, and eventually to other
jurisdictions that offer something like the Alberta Buck.
The smart money is on leading.
The transition from extractive lending to infrastructure services is inevitable.
Stablecoins, DeFi, and tokenised assets are exposing the old model.
Alberta's banks can choose their role:
Option
Action
Outcome
Lead the transition Partner on Alberta Buck development
New revenue: custody, attestation, insurance administration
Resist
Lobby against citizen liquidity
Temporary reprieve, then collapse
Ignore
Business as usual
Deposits drain to stablecoins
Banks as Infrastructure Partners
Alberta's community banks have something stablecoins and DeFi protocols don't: local trust,
physical presence, and existing relationships with Alberta families and businesses.
ATB Financial, Bow Valley Credit Union, and Servus can become trusted infrastructure partners.
Instead of earning declining interest income from money creation, they earn growing fee income from
real services: asset custody, identity attestation, insurance pool administration, and Jubilee
management.
These aren't speculative revenue streams. Every Alberta Buck issuance needs attestation. Every
pledged asset needs custody. Every insurance pool needs administration. The volume is proportional
to adoption, and the revenue is steady and predictable.
Banks don't disappear. They evolve from extractive intermediaries into trusted local
infrastructure. The smart banks will see this coming and position themselves now.
ATB Financial, Bow Valley Credit Union, Servus – Alberta's community banks can become
trusted infrastructure, not extractive intermediaries:
Service
Revenue Model
Why Banks Excel
Asset attestation
Per-issuance fee
Local knowledge, trust
Custody & safekeeping
Basis points on AUM
Existing vault infrastructure
Insurance administration
Pool management fee
Regulatory compliance capacity
Jubilee operations
Per-redemption fee
Customer relationship
BUCK ↔ CAD$ exchange
Transaction spread
Existing payment rails
Banks don't disappear. They evolve.
Alberta Leads
Ottawa won't pioneer this. Federal banking regulation protects the existing model.
But Alberta has provincial authority over property, civil rights, and insurance. Alberta has
community banks with deep local relationships. And Alberta has the political will to challenge
the status quo when it doesn't serve Albertans.
This is Alberta's to lead. Pioneer wealth-backed liquidity under provincial authority, keep
twenty-three billion per year circulating in-province, and build financial infrastructure that
serves citizens.
Ottawa won't pioneer this. Alberta's provincial authority and community banking
infrastructure make it the natural leader.
Alberta can:
Pioneer wealth-backed liquidity under provincial authority
Keep $23B/year circulating in Alberta instead of flowing to Toronto
Give Alberta's banks a first-mover advantage
Build financial infrastructure that serves citizens and banks alike
Status Quo vs. Alberta Buck
Status Quo
Alberta Buck Future
$23B/year leaves Alberta
$23B/year stays in Alberta
Banks create, you pay
You create, you keep
Wealth concentrates
Wealth circulates
Ottawa controls liquidity
Alberta controls its economy
Banks face stablecoin erosion
Banks lead the transition
The question isn't whether this transition happens. It's whether Alberta leads or follows.
The table shows the contrast. Status quo: wealth concentrates, Ottawa controls liquidity, and
banks face slow erosion from stablecoins. With the Alberta Buck: wealth circulates, Alberta
controls its economy, and banks lead the transition into infrastructure services.
The question isn't whether this transition happens; that's now inevitable. Stablecoins are already
forcing it. The question is whether Alberta leads or follows.
The Alberta Buck: Your Wealth, Your Liquidity
Access liquidity from your own wealth – same asset, same insurance, no bank, no interest
Aspect
Bank Mortgage
Alberta Buck
What backs liquidity?
Bank creates it from your asset
Your actual home equity
Who creates liquidity?
Bank (from your debt's value)
You (from your asset's value)
Equity drawn down?
No (just collateral if default)
Yes (lien on pledged portion)
Annual cost
$21,000 interest + insurance
Only insurance
Interest?
Compounds and persists for decades
No
Ownership?
Yes, until default
Yes, always
Same liquidity : Just no bank – and no forfeiture risk.
Here's the comparison. Same house, same value. The table shows what changes: who creates the
liquidity, what you pay, and what happens when things go wrong.
Two features deserve attention. First, the Jubilee mechanism. With a mortgage, one setback means
foreclosure. Generations of family wealth gone. With BUCKs, the lien on your home gradually
dissolves. BUCK holders pay a small demurrage fee: two percent annually, which accrues to a
Jubilee fund that releases liens over time. After fifty years, the lien disappears entirely. No
permanent debt. Families can recover from bad luck.
Second, what happens to banks? They don't disappear. They evolve. Custody, attestation, insurance
administration, liquidity pool management. Fee income replaces interest extraction. ATB Financial,
credit unions; they become partners in this infrastructure.
Navigate down for the step-by-step mechanics, a visual model of claim money, and the full Jubilee
redemption formula.
How It Works
Attest your wealth : Verify value of asset(s) Create Alberta Bucks – Representing a portionUse the liquidity – Spend Bucks in the economy
Easily convert between BUCKs and CAD$
Pay insurance, not interest – ~0.5% annual premiums vs. 5.0% interestRetain ownership – Full control of your assetsRedeem when you sell – or let the Jubilee dissolve the lien over time
No principal payment schedule or interest!
Six steps. First, attest what you own and what it's worth. You submit your assets; a home, farm
equipment, inventory, to an Oracle network that verifies ownership and current market value.
Second, issue Alberta Bucks representing a portion of your equity. An insurer places a lien on
that portion.
Third, spend those BUCKs in the economy. They're fungible tokens, accepted like any other
liquidity. DeFi pools like Uniswap convert billions daily between tokens like BUCKs and stablecoins
like USDC and CADC, which can be easily transferred to your bank account as Canadian dollars to
spend and pay off debts.
Fourth, pay insurance: around half a percent annually, instead of five to seven percent interest.
Fifth, you retain full ownership and use of your asset.
Sixth, when you sell the asset, you redeem the BUCKs you issued, and the lien releases. Or you can
simply let the Jubilee mechanism dissolve it gradually over time. The next few slides walk through
exactly how that works.
Claim Money: Visualized
This chart shows claim money visually. Your home is the asset. The "claim": a mortgage or BUCK
issuance, draws down a portion of its value.
The gold bar is your unencumbered equity. The grey bar is the claim against your asset. Use the
sliders to adjust home value and claim size.
The claim can never exceed the asset value; insurance is purchased to guarantee this. This is what
makes BUCKs fundamentally different from bank credit creation: they're backed by real, attested,
insured wealth. When a bank issues a mortgage, it creates new money from your promise to repay.
When you issue BUCKs, you're accessing liquidity that already exists in your asset — nothing new is
created, and nothing is owed.
Your insured, attested Asset (a home) is drawn down by a Liability (BUCKs issued).
An insurer has a Lien on the portion of the Asset used. Your books balance.
Jubilee: No Permanent Liabilities
Claims against assets release automatically in 50 years
\begin{equation}
\text{Redemption} = V \times (1 - 0.02 \times Y)
\end{equation}
Years Pledged
Redemption Cost
Monthly Equivalent
0
$380,000 ---
10
$304,000 $2,533/mo
25 $190,000 $633/mo
50 $0 (automatic)
$0
Family assets are recovered by the next generation after poor decisions – no foreclosure
Here's where it all comes together. The Jubilee Fund's returns flow back to gradually dissolve
liens across all participants.
The formula is simple. Redemption cost equals the original value pledged, less two percent times the
number of years elapsed. At year zero, you owe the full amount. At year twenty-five, half. At
year fifty, zero. Linear and predictable. No compounding. No surprises.
A home pledged for three hundred eighty thousand dollars. At ten years, the Jubilee credit covers
twenty percent, reducing your redemption cost to about three hundred thousand. If you chose to
redeem at that point, the effective cost averages about twenty-five hundred per month over those ten
years, compared to a mortgage payment north of two thousand that never decreases because of interest
compounding.
At twenty-five years, the typical mortgage term, half the lien is gone. And at fifty years,
automatic Jubilee. The lien dissolves entirely. No payment required.
This is fundamentally different from a mortgage, where one setback: a job loss, a health crisis, a
market downturn, means foreclosure. Generations of family wealth gone. With BUCKs, the lien
shrinks every year regardless of the owner's circumstances. A family that hits hard times doesn't
lose the family home. That's the safety net that debt-based money has never provided.
BUCKs in Circulation: Demurrage
Every BUCK transaction computes a 2% /yr demurrage fee
Built into the token itself – time-weighted average
Sends the fee to the Jubilee account
Spending is free – only idle balances accrue fees
Incentivises issuance, circulation, investment, and productive use
Replaces interest and inflation as liquidity costs
Your BUCKs are now out in the economy. Here's what makes them different from dollars sitting in a
bank account.
Every time BUCKs change hands, the ERC-20 transfer function does a small calculation. It looks at
how long the sender held those BUCKs, computes the time-weighted average balance since the last
transaction, and skims the appropriate fraction of two percent per year. That fee goes directly to
the Jubilee account.
This isn't a monthly bill or an annual charge. It's woven into the token itself. If you receive
BUCKs on Monday and spend them on Friday, the demurrage is negligible: a fraction of a fraction of a
percent. If you sit on a large balance for months, the fee accumulates.
The incentive is clear: spend, invest, lend, or use your BUCKs productively.
With BUCKs, the cost of liquidity isn't interest paid to a bank, or inflation eroding your
purchasing power. It's a small demurrage fee that flows to the Jubilee Fund, and that fund works
for everyone, as the next slide explains.
The Jubilee Fund
The Jubilee Fund doesn't sit idle – three parametric deployments
DeFi Liquidity Pool – Deep backstop for BUCK/CAD$ conversionParametric Lending – Short-term "flash" and collateralised loans (~15% APR)Parametric Insurance – Automated underwriting for attested assets (~30% APR)
All three are algorithmic backstops – not competitors
The demurrage fees from every BUCK transaction across the entire economy flow into the Jubilee Fund.
But this isn't a government account gathering dust. It's actively deployed in three ways, each
designed as an algorithmic backstop for the ecosystem.
First: a DeFi liquidity pool providing deep reserves for BUCK to Canadian dollar conversion.
Second: parametric lending; short-term collateralised loans targeting around fifteen percent annual
return. Third: parametric insurance; automated underwriting for attested assets targeting around
thirty percent annual return. "Parametric" means rule-based and automatic: if conditions are met,
the action happens. No loan committees, no claims adjusters, no human discretion.
The key word is "backstop." None of these are designed to dominate their markets. They set a floor
on service quality and a ceiling on pricing. Private lenders, private insurers, and private
liquidity providers will compete, and they'll usually offer better rates because they can specialise,
build relationships, and take on specific risks.
That competition is the healthy outcome. The less the Jubilee Fund needs to deploy, the more it
holds in reserve, and the more those reserves can be used to reduce demurrage fees for everyone.
And every one of these operations is fully transparent.
The Jubilee Fund: Transparency
All Jubilee fund operations are fully transparent
Oracle-underwritten, on-chain, transparent
Set floor quality and ceiling pricing for the ecosystem
Private providers offer specialised, lower-cost alternatives
More Jubilee reserves investment = lower demurrage
Every Jubilee Fund operation is a fully transparent, on-chain DeFi transaction. Each deployment is
parametric: governed by distributed Oracle networks, priced algorithmically, and auditable by
anyone. No loan committees. No claims adjusters. No discretionary decisions.
This transparency is fundamental. In traditional finance, pricing is opaque: lending rates,
insurance premiums, and investment returns are proprietary. Citizens have no way to verify whether
they're getting a fair deal. With the Jubilee Fund, every rate, every transaction, every return is
publicly visible on the blockchain.
That visibility creates a healthy dynamic. Private providers can study the Jubilee Fund's pricing
and performance, then enter the market with better, more specialised products. Citizens can compare
any private offer against the on-chain baseline. Competition is driven by genuine value, not
information asymmetry.
Use the down arrow to explore the details of each deployment.
Jubilee: DeFi Liquidity Pool
Deep liquidity backstop for BUCK ↔ CAD$ conversion
Jubilee operates a 1% fee AMM pool with deep reserves
Always available for large conversions
Private pools operate at lower fees (0.05% – 0.3%)
Handle most day-to-day conversion volume
Ecosystem benefit : confidence that BUCKs convert at fair value
Large transactions don't move the price
No liquidity crisis, even during market stress
The first deployment is the simplest to understand. If you hold BUCKs and want Canadian dollars, or
vice versa, you swap through an automated market maker pool. Private liquidity providers will
operate pools at low fees: five basis points, ten, thirty. They'll handle most daily volume
efficiently.
But what happens during a crisis? What if a large holder needs to convert a million BUCKs at once?
Private pools might not have the depth, and the price would slip.
That's where the Jubilee pool comes in. It operates at a one percent fee, much higher than the
private pools, so under normal conditions nobody uses it. But it's always there, with deep reserves,
ready to absorb large transactions without significant slippage.
This is exactly how institutional market making works in traditional finance: a backstop of last
resort that provides confidence even when it isn't actively used. The mere existence of deep
Jubilee liquidity gives everyone confidence that BUCKs convert at fair value, which encourages
adoption and reduces the risk premium that would otherwise be priced into every BUCK transaction.
The one percent fee on large transactions that do route through the Jubilee pool generates returns
that flow back to reduce demurrage for everyone.
Jubilee: Parametric Lending
Algorithmic backstop lending – target ~15% APR
Short-term, fully collateralised loans in BUCKs
Premiums auto-computed by distributed Oracle risk assessment
Higher rates than private lenders – by design
Private lending handles most demand
Ecosystem benefit : credit is always available
Rates set by distributed Oracle networks, who share in risk/reward
The second deployment is parametric lending. The Jubilee Fund offers short-term, fully "flash"
(uncollateralized single-transaction) and collateralised (RWA tokenized asset) loans denominated in
BUCKs. The interest rate is computed automatically by distributed Oracle networks that assess
borrower risk based on their attested asset portfolio, repayment history, and collateral quality,
and the Oracles' historical accuracy.
Individual rates vary based on borrower risk, but the pool targets an aggregate fifteen percent APR.
That's intentional. Private lenders, credit unions, even banks operating in the BUCK ecosystem,
will offer five, eight, twelve percent to good borrowers. They'll win most of the business because
they can specialise, assess soft factors, and build long-term relationships.
The Jubilee Fund's role is to guarantee that credit is always available, to anyone, regardless of
market conditions. During a downturn, when private lenders tighten up, the Jubilee Fund keeps
lending. During normal times, it barely lends at all because private rates are better. Sometimes,
an expensive loan is better than no loan at all.
This eliminates the credit crunch dynamic that makes recessions worse. In the current system, banks
pull back lending precisely when the economy needs liquidity most. With the Jubilee backstop,
algorithmic lending continues regardless of market sentiment. And because all the pricing is
on-chain and transparent, private lenders have a clear baseline to compete against. No opacity.
No surprises.
Jubilee: Parametric Insurance
Algorithmic backstop insurance – target ~30% APR
Automated parametric coverage for RWA assets
Triggers on Oracle-verified events (fire, hail, theft, price breach)
No claims adjusters, no disputes, no delays
Higher premiums than private insurers
Provides actuarial information for insurers
Ecosystem benefit : insurance is always available
New asset types can be insured from day one
The third deployment is parametric insurance, and it targets the highest returns: around thirty
percent annually. Again, the high premium is by design.
Private insurers will cover most attested assets at lower premiums. They have actuaries, they
understand local risks, they bundle portfolios. A well-known insurer offering wheat crop coverage
at one percent will beat the Jubilee Fund's two to three percent every time.
Premiums will be high relative to established insurers. So why does the Jubilee Fund offer
insurance at all?
First, new asset classes. When someone wants to attest and insure a novel asset, say a fleet of
electric vehicles, or a portfolio of renewable energy certificates, private insurers may not have a
product yet. The Jubilee Fund's parametric model can price it algorithmically from day one, based
on Oracle data.
Second, the transparent actuarial baseline. Because Jubilee pricing is on-chain and parametric,
every participant can see exactly how risk is priced. There's no information asymmetry. No opaque
pricing. The market becomes more efficient because the floor is visible to everyone. Private
insurers can study the Jubilee fund's experience and enter the market later with better products,
and compete against this baseline.
The thirty percent target return on insurance capital reflects the higher risk, but also generates
the highest contribution to demurrage reduction when claims are low.
Self-Tuning Rates
All rates adjust automatically via PID feedback loops
Demurrage rate
Likely: < 2% /yr (if fund returns > zero)
Lending & insurance premiums
Likely: higher than private-market rates (set by Oracle networks assessing borrower/asset risk)
BUCK_K credit issuance multiplierNo committees. No politics. Just math.
Every rate in the Alberta Buck system is governed by PID feedback loops: the same proportional,
integral, derivative controls used in industrial automation, cruise control, and thermostat systems.
Proven, stable, well-understood mathematics.
The demurrage rate is the one BUCK holders care about most. The maximum is two percent per year.
But that maximum only applies if the Jubilee Fund earns zero returns. In practice, the fund's
lending and insurance operations generate revenue, and that revenue reduces the effective demurrage
rate.
Here's the arithmetic. If the Jubilee Fund earns twenty percent on its deployed capital, and the
fund is large enough, those returns can substantially offset the two percent collected. The
instantaneous demurrage rate charged on each transaction adjusts automatically based on current fund
performance. Long-term, the effective rate could be well below two percent.
The same PID architecture governs lending premiums, insurance pricing, and the BUCKK multiplier
that controls how many BUCKs can be issued against a given asset value. Each loop has a target, a
measurement, and a correction signal. No board of directors setting rates. No political pressure.
No central bank meetings. Just transparent, auditable, on-chain mathematics that anyone can verify.
The next slide lets you see this self-tuning in action.
Demurrage in Action
This chart simulates BUCK supply growing over time and shows how the Jubilee Fund and effective
demurrage rate respond.
The blue line is BUCK supply in circulation, growing as more Albertans issue BUCKs from attested
assets. The gold line is the Jubilee Fund balance: two percent BUCK supply, times average
BUCK-Years vs. the 50-year jubilee period.
The green line at the bottom is the effective demurrage rate. Use the slider to adjust the Jubilee
Fund's annual return rate. At zero percent returns, the fund needs the full two percent demurrage to
maintain its target. As you increase the return rate, watch the green line drop: investment returns
offset the fees, so BUCK holders pay less.
With positive fund returns, the effective demurrage drops below two percent. This is the
self-tuning mechanism in action: the better the Jubilee Fund performs, the less it costs to hold
BUCKs.
As the Jubilee Fund grows over time, even modest returns reduce the effective demurrage rate
substantially. Use the sliders to experiment: adjust fund returns, issuance, and redemption rates,
and watch how the system finds its own equilibrium without any central authority setting rates.
At the defaults: five percent fund returns with balanced five percent issuance and redemption, the
effective demurrage rate drops to about 1.2 percent after ten years. The longer the system runs,
the lower the cost of holding BUCKs. Toggle the simulation table on the right to see exact values
at each time step.
Demurrage keeps BUCKs circulating. The next slide shows the other self-tuning mechanism: how
BUCK_K maintains purchasing power stability.
Simulation Month 0 Total BUCKs 1.00B BUCKs issued 1.00B BUCKs redeemed 1.00B BUCK-Yrs avg. 0 Fund Target 20.0M Fund Bal. 20.0M Demurage Rate 2.00%
Reset
Even modest returns on the growing Jubilee Fund reduce the Demurrage fee powerfully over time –
It could eventually eliminate the fee completely.
BUCK_K Stabilization
This simulation shows how the BUCKK multiplier maintains price stability automatically.
On the left is the commodity basket that defines the BUCK's purchasing power: labour, energy, food,
and materials. Try dragging the commodity price sliders. As commodity prices change, BUCKs will
always purchase the same basket; BUCK_K will adjust issuance to ensure this: zero inflation.
In the centre, the blue line tracks BUCK supply, and the orange line tracks demand. The green line
is BUCK_K: the maximum percentage of your home's value you can use to issue BUCKs. It's
controlled by a PID feedback loop: the same proportional-integral-derivative mathematics used in
cruise control and industrial automation. As the economy expands and contracts, BUCK_K adjusts to
provide the appropriate BUCK supply, spread evenly across all owners who have attested wealth to
issue BUCKs.
Watch what happens when you increase a commodity price. The BUCK's value in terms of civilization's
base commodities is retained. Adjust the economy's demand for BUCKs; the PID detects the gap and
increases or decreases BUCK_K, zeroing out inflation and deflation.
On the right, you can see the BUCK issuance respond: a higher BUCK_K means homeowners can issue
more BUCKs against their property. Supply rises to meet demand. The system self-corrects.
The bottom controls let you adjust the portion of Alberta's economy transacting in BUCKs (affecting
demand) and the number of homes participating in BUCK issuance (affecting supply). In every case,
the PID loop finds equilibrium automatically; no committees, no politics, just math.
Because every rate and ratio is on-chain, citizens who've issued BUCKs can see and act on
opportunities directly: exchanging wealth for BUCKs at a discount, or BUCKs for wealth at a
premium. Transparent markets let ordinary people participate in the same arbitrage that today is
reserved for institutional traders.
Commodity Basket
Basket Index: 1.00
Supply & Demand
Economy using BUCKs
50%
Month 0 BUCK_K 60.0% Supply - Demand - Ratio 1.000 Basket 1.00 PID Components P 0.0000 I 0.0000 D 0.0000
The BUCK_K multiplier uses PID feedback to maintain purchasing power against the commodity basket –
automatically adjusting how many BUCKs each homeowner can issue.
A Generational Opportunity
Canada's best and brightest are leaving – where to?
Staying in Canada
Leaving Canada
10-15× income housing
3-5× in US, elsewhere
Dual income required forever
Single income possible
Family formation impossible
Family formation viable
Debt servitude as lifestyle
Wealth building possible
Birth rate 1.4 (civilisational collapse)
Replacement possible
Young Canadians aren't lazy. They just want a life that doesn't
punish productivity with debt slavery .
The question: Can Alberta become where they go instead of away?
You've seen the numbers. Households save two hundred thousand. Farmers save eighty-five thousand
a year. The province could grow the Heritage Fund by three hundred twenty-five billion.
But this isn't just about money. It's about people.
I know young Canadians who are leaving. Smart, hardworking people. They've done the arithmetic.
Housing at ten to fifteen times income. Their parents paid three to five. Two incomes forever just
to service debt. Family formation impossible. Birth rate at one point four: below civilisational
replacement.
These aren't quitters. They're rational people seeking opportunity. Right now that means leaving
Canada.
What if Alberta became where they go instead? Housing at four to six times income. Wealth that
transfers between generations instead of being extracted.
Navigate down for the comparison table, the virtuous cycle that lower housing costs create, and a
concrete example: a young Albertan earning sixty thousand a year. Traditional path: housing out of
reach. Alberta Buck path: eleven percent of income. Achievable.
That's what's at stake. Not just economics. Whether Alberta becomes a place where the next
generation wants to build a life.
Alberta as the Beacon
Side by side. Canada's status quo versus Alberta with the Alberta Buck.
Housing drops from ten to fifteen times income to four to six times. Cost shifts from interest plus
insurance to insurance only. Family wealth is transferred between generations instead of extracted.
Young talent stops fleeing and starts arriving. Birth rates recover. Alberta becomes the
destination; not just for Albertans, but for ambitious Canadians coast to coast and talent from
around the world.
If Alberta gives citizens fiscal autonomy:
Canada (Status Quo)
Alberta (With Alberta Buck)
Housing: 10-15× income
Housing: 4-6× income
Cost: Interest + insurance
Cost: Insurance only
Family wealth: Extracted
Family wealth: Transferred
Young talent: Fleeing
Young talent: Arriving
Birth rate: Collapsing
Birth rate: Recovering
Alberta becomes the destination – not just for Albertans, but for ambitious
Canadians from coast to coast, and talent from around the world seeking opportunity.
The Virtuous Cycle
Lower housing costs lead to young families buying homes. Family formation becomes viable. Birth
rates recover. Talent is attracted. Innovation flourishes. Twenty-three billion circulates
locally instead of leaving. Success attracts more success.
Alberta doesn't just keep its youth. It attracts the best from everywhere. That's the virtuous
cycle that fiscal autonomy creates.
Fiscal autonomy creates a magnet effect:
Lower housing costs → Young families can buy homesFamily formation viable → Birth rates recoverTalent attracted → Innovation flourishesWealth circulates locally → $23B/yr grows AlbertaSuccess attracts more success → Alberta becomes Canada's engine
Alberta doesn't just keep its youth. It attracts the best from everywhere.
How Alberta Buck Enables This
A concrete example. Young Albertan earning sixty thousand a year.
Traditional path: can afford about two hundred forty thousand in mortgage. Average home costs far
more. Housing is out of reach.
Alberta Buck path: family attestation enables two hundred thousand in BUCKs from parents' equity.
The young person issues three hundred thousand in BUCKs. Annual cost drops from over seventeen
thousand to under seven thousand. Housing cost goes from twenty-nine percent of income; impossible,
to eleven percent; achievable.
Family savings compound across generations. That's the generational wealth transfer that interest
currently prevents.
Young Albertan earning $60,000/year:
Can afford only ~$240K mortgage (4× income). Average home: $380,000 +. Housing out of reach.
Alberta Buck: Family accesses $200K BUCKs from parents' equity. Young couple buys home with $300K BUCKs issued. Cost: $6,760/yr vs $17,260/yr.
11% of income (achievable) vs. 29% (impossible)
Family savings compound: $221,734 over 25 years → helps next generation.
Constitutional Foundation
Alberta has unique authority under Sections 92(13) and 92A
Federal Power (s. 91)
Alberta Buck
Conflict?
Currency issuance (s. 91(14))
Not issuing legal tender
No
Monetary policy (s. 91(15))
Not setting interest rates
No
Banking regulation (s. 91(15))
Using insurance, not banking
No
Legal tender laws
CAD remains legal tender
No
BUCKs aren't currency, legal tender, or monetary policy.
BUCKs are voluntary, insurance-backed private contracts – clearly provincial jurisdiction.
CAD$ remains Alberta's money. BUCKs are Alberta's liquidity .
Can Alberta actually do this? Isn't money federal jurisdiction?
Yes. Because BUCKs aren't money. They're insurance-backed private contracts. Property rights,
insurance, contracts: all provincial under Section 92(13). Natural resources under Section 92A.
BUCKs don't compete with the dollar any more than a home equity line of credit competes with the
dollar. Both unlock value from assets. BUCKs just do it without debt.
"What about federal pushback?" That's exactly why provincial partnership matters. Navigate down
for the jurisdictional analysis, and why we need the province's legal framework before hostile
incumbents mobilise. Without provincial backing, insurers can't enforce liens, contracts get
challenged, and the entire system becomes vulnerable.
ATB Financial has operated outside federal Bank Act jurisdiction for eighty-seven years. The
precedent is established. The Alberta Buck is voluntary; anyone who prefers a traditional
mortgage can still get one.
Provincial Jurisdiction
Section 92(13) gives provinces exclusive jurisdiction over property and civil rights. That covers
property law, contract law, and insurance regulation. All the building blocks of Alberta Bucks.
Section 92A gives Alberta exclusive authority over natural resources, including taxation and royalty
collection. Constitutional basis for accessing resource wealth as liquidity.
And the precedent: ATB Financial has operated for eighty-seven years outside the federal Bank Act.
Alberta already runs financial infrastructure under provincial authority.
Section 92(13): Property and Civil Rights
Section 92A: Natural Resources Authority
Exclusive jurisdiction over resource development
Taxation and royalty collection
Constitutional basis for monetizing resources
Precedent: ATB Financial has operated for 87 years outside federal Bank Act jurisdiction.
Why Provincial Partnership?
If this is private contracts and insurance, why involve the province?
Because banks will fight back. Twenty-three billion a year is an enormous cash cow. When hostile
banks realise the threat, they will use every legal and regulatory tool to shut it down.
Without provincial partnership, insurers can't enforce liens through Land Titles. Contracts get
challenged in hostile courts. Regulatory attacks frame it as unlicensed banking. Insurers refuse
coverage because they can't recover claims.
With provincial partnership, liens are registered. Contracts have provincial law backing. The
system is clearly framed as insurance under Section 92. Every interface is buttressed before
rollout.
"If this is private contracts and insurance, why involve the province?"
Private implementation IS possible – MakerDAO proves it. But some banks will fight back instead of evolving.
When hostile banks realise their $23B/year cash cow is threatened, they will use every legal and regulatory tool to shut it down.
Insurers need to recover assets after claims
The table tells the story. Without provincial partnership, insurance is unenforceable because
insurers can't recover assets after claims. Contracts are challenged in hostile courts. Regulatory
attacks frame everything as unlicensed banking.
With provincial partnership, liens are registered with Land Titles. Provincial contract law
provides backing. AIRB supervision ensures enforceable claims. Provincial jurisdiction shields
the system from federal overreach.
We must buttress every contract, insurance, and regulatory interface before rollout. Not after
hostile banks mobilise.
Without Provincial Partnership
With Provincial Partnership
Insurance unenforceable (no lien recovery)
Liens registered with Land Titles
Contracts challenged in hostile courts
Provincial contract law backing
Regulatory attacks on "unlicensed banking"
Clearly framed as insurance (s.92)
Insurers refuse coverage (can't recover)
AIRB-supervised, enforceable claims
Billions spent on legal defence
Provincial jurisdiction shields system
Without provincial partnership, asset recovery is legally uncertain – insurers won't participate, or premiums become prohibitive.
We must buttress every contract, insurance, and regulatory interface BEFORE rollout – not after hostile banks mobilise against us.