The Global Reserve System (GRS) is a project that will soon facilitate the use of a new and more useful kind of money, the global dollar (GLB). Multiple providers will issue various forms of currency on the global dollar standard, including crypto coins, conventional over-the-counter notes, and even bank accounts. The GRS is itself not a specific type of currency, but a settlement and asset management system that can operate through a wide range of institutions and technologies.

Membership of the GRS will give cryptocurrency exchanges the opportunity to issue proprietary global dollar coins, allowing their customers to earn a stable and reasonable rate of return on uninvested funds. The global dollar standard also makes a cryptocurrency ecosystem viable for the first time. In the non-crypto world, stock brokers can offer their customers over-the-counter global dollar notes, while banks might choose to provide coins, notes, or accounts.

Providers will be issued shares in proportion with their contribution to the global dollar money supply, benefiting from greater profits as the system expands. Early adopters are also likely to gain an enduring market share advantage.

Whatever their form, global dollars are ideal for international finance and commerce, with advantages that include:

Currency risk

The global dollar is not a source of financial currency risk (although positions can always be constructed that will involve risk). The financial value of the global dollar remains constant, based on the world of available investment opportunity. By this standard national currencies vary constantly, so that the real financial value of a debt, for example, depends greatly on the value of its currency when it is paid.

Counterparty risk

All forms of the global dollar are backed 1:1 by GRS credits, even if the provider is insolvent or otherwise lacks liquidity. The credits themselves represent real portfolio assets with a transparent market value.

Reasonable rate of return

The ‘reasonable rate of return’ of a balanced, diversified international portfolio is implicit in the value of the global dollar unit, so that all users of the currency effectively enjoy the benefits of a highly diversified passive investment fund with no loss of liquidity. Conventional interest becomes largely redundant.

Interest rate risk

The element of interest that represents economic return, or global investment opportunity cost, is reflected in the value of the global dollar rather than explicit interest. The global dollar ‘base rate’ of interest therefore remains stable at 0%, making interest rate forecasts unnecessary.

Financial equivalence through time

Global dollar values do not require ‘discount rate’ or time-value-of-money calculations. A global dollar today is financially equivalent to a global dollar in any subsequent year. This creates an ideal unit of account for pricing investment assets, which will be priced according to their performance relative to global investment opportunity.

 

Founder: Michael English, BEc, BLitt (W.Aust.), MIL (Syd.), MArchSci (ANU)

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Michael English is a former Royal Australian Air Force intelligence officer (now reserve), who was last deployed as the Australian joint headquarters intelligence officer in Afghanistan in 2016. His unusually extensive education includes degrees ranging from economic history and finance to philosophy, international law, and archaeological science.

Work on the Global Reserve System began in 2017 and the project can now be found at UWA IQX in Perth, Western Australia.

Contact: Michael.english@global-reserve.org