The global dollar

The global dollar (GLB) is not a cryptocurrency or a conventional security. It is a unit of value that can take many forms, designed to reflect international financial opportunity cost. As the only currency unit based on a properly financial standard of value, the global dollar avoids many of the problems associated with conventional fiat currencies. It also largely eliminates the traditional trade-off between liquidity and return, turning money itself into an investment asset equivalent to a highly diversified passive fund.

Each global dollar represents a share in a balanced and diversified international portfolio, the ‘Global Reserve Portfolio’ (GRP). The objective of the portfolio is to approximate a generally acceptable standard of financial value with investments that are diversified internationally and between major asset classes. Global dollars represent a neutral disposition of funds, removing the opportunity cost of uninvested money and the value uncertainty of national fiat currencies, having regard for both long-term returns and short-term stability.

Use of the global dollar is enabled by a settlement system, the Global Reserve System (GRS), which allows many providers to issue the global dollar in various forms. The GRS does not offer any global dollars directly to the public; GRS global dollar credits exist only within the settlement accounts assigned to member institutions. This arrangement is similar in principle to the interbank settlement systems run by central banks, the public providers in that case being commercial banks through customer accounts and related services. The GRS is effectively the link between the global dollar money supply and the GRP, tying all forms of the global dollar to the value of the portfolio.

Economists traditionally define ‘money’ in functional terms as a medium of exchange, a unit of account, a store of value, and sometimes a standard of deferred payment. All of these functions relate to questions of value and opportunity cost. As a stable and meaningful unit of financial value, the global dollar promises to be the core of a functionally superior kind of money.

Monetary utility depends heavily on network effects, making initial deployment of a new currency the most difficult stage. One aspect of this problem is that people are accustomed to existing national currencies, and will take some time to recognise the benefits of a better system. Another is that financial services will not support a new currency unit without a period of adjustment, and sufficient incentive to make that adjustment. These challenges will be mitigated to some extent by introducing the global dollar to specific sectors in which the benefits are clear and logistical barriers minimal. The proposed early forms of the currency are crypto coins and over-the-counter notes, requiring little institutional adaptation.