A currency that inherently reflects the time value of money opens the way for much simpler forms of finance. This is particularly important in the underbanked world, where every complication is a threat to the viability of financial services. Mobile money and similar services do not normally offer interest, which implies a financial loss for anyone holding wealth in this form. Reliance on interest as a revenue stream is also a significant business risk for service providers, future interest rates being as unknowable as exchange rates. A more rational revenue structure would focus on account and transaction fees, while providing customers with a financially stable store of value. It is only in this way, in fact, that these providers can hope to maintain a competitive advantage as their customers transition out of ‘underbanked’ status, or as they expand into more developed markets.
The competitive advantage of a financially stable currency unit extends well beyond compensating for bank interest. The value of the global dollar essentially reflects the returns available through passive investment funds, which will normally be far superior to any bank account. In practice underbanked populations do not have access to these funds, and could not in any case afford the loss of liquidity that such investments entail. By removing the trade-off between liquidity and return, the global dollar eliminates this disadvantage for all users of the currency. The efficient generic rate of return can be a common baseline rather than a privilege of ‘sophisticated’ investors.
Global dollars also promise stability in parts of the world where local currencies are unreliable or a multicurrency environment complicates everyday transactions. The US dollar is a poor solution, being unlikely to bring much improvement in financial currency risk, and requiring effective access to the global financial establishment just to maintain value. Credit in volatile regions is particularly vulnerable to currency and interest rate risks, and will benefit greatly from simplification. Global dollar loans and deferred payments implicitly maintain financial equivalence through time, so that only the specific costs and risks of the transaction need be represented explicitly.