Briefing Note: Background, Concept, System, and Market Approach of the Global Currency Union
Global Currency Union | July 2012
The main function of the GCU is to enhance currency exchange rate stability from the specific moment a commercial agreement has been entered into, through the resultant production and delivery of goods and services, up to the time monetary settlement is carried out.
Based on the approach and structure described below, the Global Currency Union will provide trading partners an easily accessible and easy-to-use system giving them an efficient, secure and credible way to reduce exchange rate risks associated with cross-currency settlement.
The Union plans to make the Global Currency Unit (GCU) available to the global marketplace for use on demand as a unit of settlement. We foresee that we should be able to achieve initial launch by the end of next year. As a first phase, the system will be made available for users in Denmark, Sweden, Norway, the United Kingdom and Germany, and then for users in all other markets based on demand. In each case, the Union will implement processes adjusted to each individual country's circumstances, which our technical system has been designed to meet. The Union will also cooperate closely with the relevant national authorities to ensure the highest level of system security and prevention of illicit activities by GCU users.
If implemented and operated as intended, the GCU will become a valuable new feature for international finance that to a great extent will make good a deficiency in the monetary system of market-determined exchange rates by providing a stabilizing function serving trade settlement, and thereby the general prosperity. Because the GCU has no authority to force usage of its new monetary product, any use of that function by businesses and investors will reflect genuine demand in the market.
External Link: CONTINUE READING: GCU Briefing Note [PDF]blog comments powered by Disqus