Kunming mother sues US central bank over shrinking cash
She claims Federal Reserve has allowed her deposit of US$250 to lose a third of its value
A woman in Kunming, Yunnan province, is trying to sue the United States central bank after discovering that the real value of the US$250 she put in an account in 2006 had shrunk by 30 per cent.
She claims it was a result of the Federal Reserve issuing too much money.
Her attorney, her son Li Zhen, called the lawsuit "litigation for the public good" which aimed to stop the Fed from continuing its quantitive easing policy and promote people's awareness of their rights.
He filed the lawsuit alleging "the abuse of monopoly in issuing currency" last month at the Kunming Intermediate People's Court on behalf of his mother, Liu Hua , but the court has yet to decide whether to officially place the case on file.
Since the global financial crisis, the Fed has been pumping more money into the economy via several rounds of so-called quantitative easing to try to boost consumer spending and revive economic growth.
The judges were "greatly surprised" to see the indictment, said the 36-year-old lawyer, adding he was the first mainlander to have filed a lawsuit against a foreign country's central bank.
Li, who works at the Yunnan Tongbang Law Firm, said he referred to Black's Law Dictionary, the most cited legal dictionary in the US, and concluded that the Fed is a private institution instead of a government department.
According to the dictionary, US financial institutions are required to invest in the Federal Reserve System if they want to join it, which he construed as meaning the Fed is privately owned.
"Since the Fed is a private institution which enjoys a monopoly over the issuing of currency, US dollar holders can sue it for printing too much money," he said.
Li said he requested two things from the court - that the Fed halts the abuse of its monopoly over the issuing of dollars and that it makes a "symbolic compensation" of US$1. Asked about the possibility of whether the court will accept the case, Li said it was "difficult to say".
He added: "Since the Anti-Monopoly Law was enforced in 2008, there have been not many serious lawsuits in this regard.
"It was not until early last year that a judicial interpretation for civil anti-monopoly cases was issued … besides, this case involves very professional issues and is very complex."
He said he was looking for more "victims" like his mother and expected to bring a class action in a US court.
Professor Wang Xiaoye , an expert on anti-monopoly law, said the depreciation of a currency was a business risk that holders had to bear.