Let us conduct a thought-experiment. Suppose the Treasury knows that, as a result of reforms to the state pension system, it is going to save money. It could instruct the Bank of England to issue a voucher to represent £1 of that money now, to be redeemed later. Since there might be a delay, the face value of the voucher would be index-linked against a sensible measure of genuine inflation such as RPI. So a 2013 voucher for £1 would be redeemable at, say, £1.04 in 2014, or £1.09 in 2015, or whatever. The Bank would issue vouchers and inform participants that they could be used for investment within a pension plan—and only for that purpose. Taxpayers could not turn up at a corner shop and use them to buy cigarettes, for instance.

That would make the vouchers a bit like money, but not money. It would make them rather like the vouchers issued by supermarkets with their loyalty cards, which have a value when used to buy goods from their shops but are utterly worthless elsewhere. Why would the pension providers accept these vouchers? It would have to be a requirement of the new regime that they would have to accept them, and could use them as legal tender at their uprated face value to acquire financial assets (shares, bonds, etc) from financial intermediaries or issuers. To ensure that intermediaries and issuers accepted them at face value they in turn would have to be entitled to deposit them with a bank as if they were cash. Thus, if Jarndyce & Jarndyce plc issued £1 million of new shares it would make no difference whether it received cash or vouchers in exchange.

So these vouchers would be a form of ghost-money, and quicker than you could say "Bob Cratchit" they would all end up inside the banking system. The banks, of course, could not issue them to their own customers, so this ghost-money would not enter the "real economy" but they could use them in dealing with other banks or in their own market trading activities. A bank could hold vouchers as risk-free assets worth their face value, serenely confident in the guarantee of their ultimate redemption by the Bank of England, and behind them the Treasury (and what could possibly be more reliable than that?). But maybe, just maybe, a bank might prefer not to wait. There would have to be a provision that a bank could tender vouchers to the Bank of England as payment for any transaction between them. This willingness of the Bank of England to accept them would be the ultimate underpinning of the value of the vouchers. Quicker than you could say "Tiny Tim", we could expect the vouchers to have made their way back to where they started, the Bank of England.