Steve Royal began worrying about the national debt two decades ago.

He failed to get the Republican Party’s nomination for a U.S. House seat in 1990, and eyed the state Senate. But he now believes the state treasurer’s office is where he can have the most impact.

Royal, 61, of Elkin, is challenging State Treasurer Janet Cowell for the position, to which she was elected four years ago. Royal is a licensed certified public accountant, and has worked as an accountant for the state of North Carolina and a controller and senior cost accountant at a manufacturing firm.

The Observer spoke with Royal this week on some of the issues most important to the office. Questions and answers have been edited for length and clarity.

Q. With a balanced budget and low debt-to-GDP ratio, why is North Carolina’s debt an issue?

The state has a constitutionally balanced budget. That doesn’t mean that we can’t have debt issues. That’s a complete misnomer. The state owes billions of dollars.

We don’t need to become like the federal government. There’s been some serious talk about the federal debt rating being downgraded again. You don’t want to become like Greece.

I’m worried about it getting too high. It’s about as high as it can be right now. To say if it is OK at this time, I would say no. We’re still skating on thin ice.

Q. What’s the alternative? Bridges still need to be built and roads maintained.

You can’t do it quickly. At this time, we seem to be doing OK. We seem to be able to manage it. If we have another downturn, we may not have adequate cash on hand.

Money from Washington, that faucet’s going to be turned off one day. I don’t know when, but it’s going to be turned off one day.

Q. How would you manage the state’s investments?

It’s going to be a more realistic attitude. The state treasurer’s office likes to say they are careful about what they do. I have a quote here somewhere where it says they manage it in a “calm manner” and they “keep a steady hand on the wheel.”

But a lot of what we have is managed passively. We just literally give the money to somebody and tell them, “We trust you, do whatever.” It’s not limited. That’s how you end up with Facebook (investments). I believe at this time that a dot-com IPO is just not an appropriate venue.

I would have more people internally in the treasurer’s office taking a more active role in what we’re investing in.

Q. Cowell has been in the news for a few things lately, including the losses from the Facebook IPO and the office’s investigation into possible Libor losses. Is there anything you would be doing differently?

There are other issues that haven’t even come out yet. These financial firms, they place an order for you, they also have been accused of showing that you bought it at the worst price of the day, and when you sell it, you get it again for the worst price of the day.

And who knows? We don’t know at this time. That’s why I’m calling for a full independent audit of the pension fund and its operations so we can see what else has been going on with this.

We had another issue, the Lehman loss. That went through another investment firm (Bank of New York Mellon). They gave the money to Lehman Brothers, Lehman Brothers went bankrupt, and now we’re suing.

How did we get stuck with it? Why didn’t we just buy it from Lehman? We’re so big, we don’t have to pay somebody a commission to manage all this for us. The current treasurer, and it started back before her tenure, she’s going to pay under her tenure $1 billion for this passive management. That seems to be too significant for me.

I’m also concerned about this pay-to-play. The current treasurer will receive more during her tenure just from one big law firm in New York City, more than I will spend on my entire campaign. That’s the law firm that she has chosen to be lead counsel to head the Facebook lawsuit.

Q. Cowell has made financial literacy one of her main issues. Do you agree that that should be a priority?

This is the one thing that we probably agree on absolutely and completely. I have no conflicts. It is needed desperately. I have a friend who is a Ph.D. economist, we went to high school together, now he’s a professor. He says, “Steve, it’s so sad, I have people here who want to become economics majors, but they don’t know anything.”

We definitely need some financial literacy out there.

Q. You have talked in the past about establishing an alternative regional currency. Why is that a good idea?

That was an answer I gave to an economic questionnaire that was about new approaches or additional ideas that could be used to increase economic activity.

We went through what a lot of people called the “Great Recession.” I say about a year ago we transitioned into what I call the “Great Stagnation.” Now unfortunately with what (Federal Reserve Chairman) Ben Bernanke is doing, you can’t call it QE3. It’s QE unlimited. A lot of people are questioning the viability of this.

I’m talking about the auxiliary currency being possibly a safety net rather than an augmentation. I tried to compare it to the National Guard, the fire department or the police department, or the SBI. These are things you have, but if you use them, something bad has occurred. You really hope you don’t have to use them.

I view the auxiliary currency idea as the same way. It’s something that you have. It is a form of insurance. To me, it’s not radical. It’s not extreme. It’s a form of economic insurance.

Q. Anything else?

I’m only running for one term because I don’t really want to live in Raleigh, and I really don’t want to die there.

It’s reform it, fix it, and go home in four years. And that’s what I’m intending to do.