The Global Reserve System (GRS) is designed to support a monetary unit that reflects an efficient generic rate of return for an international investor. The core of this system is the Global Reserve Note (GRN), a largely conventional OTC security that defines the global dollar just as the Federal Reserve Note defines the US dollar. The value of the Global Reserve Note is in turn defined by the assets of the Global Reserve Portfolio (GRP). This system is technologically agnostic, operating in much the same way as any other currency. It also needs no monetary policy; money supply will vary according to demand through a creation and redemption mechanism, independent of unit price.
The Global Reserve Portfolio (GRP) will take a ‘fund of funds’ approach to achieving extreme diversification in global assets. ETF providers have the scale and existing expertise to efficiently manage large portfolios across the various asset classes, and these products have the additional advantage of a readily available market price. This greatly simplifies the task of assembling and valuing an otherwise complicated international portfolio. The GRP will represent a balance between concern for long-term returns and short-term stability, with assets divided between global equity (40%), global property (40%), cash (10%), and gold (10%).
Fees will be charged against the GRP at a rate of 0.20% of AUM, comparable with the more competitive passive funds. Component fund expenses are expected to average approximately 0.30% of AUM, for a total management expense close to 0.50%. Although the ‘fund of funds’ structure involves a slight additional expense, this is outweighed by the utility of an elegantly simple investment asset and a highly functional monetary unit. With the Global Reserve Note as its base money, the global dollar will become part of the established financial system in much the same way as any conventional currency.