Embarking on his fourth attempt over his reign to implement a functional economy in the Kingdom of Hanover, King Alexander has announced a new policy that will make the micronation the first to have “an honest functional currency … real money with real value.” The policy largely relies on the pegging of the Hanoverian Talen to the Linden, which is the currency used with the Second Life simulation. The move is seen as a natural progression of Hanover’s increasing involvement in Second Life.
Reflecting on past failures in micronational economics, the King voiced that those past failures occurred as the architects “fundamentally picked the wrong currency,” referring to attempts to peg value with other micronational currencies. By pegging the Talen with the Linden, it is hoped that a functional economy can be attained through the exchange of real goods and services in return for money of macronational value (the Linden is convertible to macronational currency, thereby allowing the Talen to be similarly converted).
One of the major hurdles to a functional Hanoverian economy remains market liquidity; something that has been difficult to attain in micronationalism given that the only regular exchange of money in the micronational market is between governments and their employees. It is hoped that the Linden Dollar will act as a bridge that will allow the difficulties associated with attaining a viable marketplace to be overcome. According to the King, “It provides a midrange market. It is neither physical, nor fantastic, but virtual. It works in an economy range where a few [macronational] cents can literally buy you a new suit. A few more cents will get you a car. A few more a house … these are reasonable amounts for a micronational currency to support.” The use of the Linden Dollar will effectively open Hanover to the highly developed Second Life marketplace, which can be used to spur micronational economic activity through the application of a thoroughly evolved simulation.
Possibly limiting the systems intermicronational use is the underlying issue of requiring macronational currency to convert to Lindens, and finally to whatever micronational currency is of interest. While the very low cost of simulated goods (“cents”) bodes well to mitigating the hesitation of many micronationalists to spend money on what can be an unstable hobby (in terms of longevity of investment), the allocation of such funds presents a problem. That allocation is highly dependent on the micronationalist possessing a means to make the investment. Depending on the age and macronation of origin of the micronationalist, he or she may not be able to make use of a credit card, Interac, or other money transfer option. This barrier could prevent widespread implementation of Hanover’s policy, should it prove to be successful.
Hanover will pursue widespread implementation by approaching micronations to peg their currencies to the Talen to make the Kingdom the central hub for the micronational economy. In calling for currencies to be pegged to the Talen, rather than each micronation following Hanover’s lead and pegging its currency to the highly stable Linden Dollar, the King noted that his micronation is “by far one of the most stable micronations around [and is] going to be around for a long time.” He continued, “Hanover will have the only existing infrastructure … and will extend use of the infrastructure without cost or restriction to any nation that accepts the terms of service.” Also promised is that by using the Talen as the governing micronational currency, intermicronational trade will be increased, and there will be no cost to convert currency.
In a statement to the Standard, King Alexander said that his proposal, if implemented throughout the community, “would be a great binding force in the sector.” It would also provide Hanover with a high-profile intermicronational role, which is has traditionally lacked due to its isolationist past.