THE MAIN SYSTEM

Organic global currency or abbreviated as OGC is a global (international) currency system created and operated jointly by all member countries for international transactions among member countries and built directly on the national currency system of each member country. OGC is not used for domestic transactions. OGC is also not used for transactions with non-member countries.

System/model name: Organic global currency (OGC)

Name of the central bank: The Global Central Bank or The Global Bank or The Globe

Currency code name: Glob

The code name that we recommend for Organic global currency is Glob, derived from the word “globe”. The last letter “e” is omitted so that spelling is consistent with the writing. Because Glob will be used by people all over the world. It is important to make consistency between reading and writing. Such consistency is aimed so that anyone from any country and with any language background can write and spell easily.

Glob can be pronounced Glob as we say the Globe in English or Glób as we say global, organization, or, etc.

1.     Three Main Principles

The organic global currency is built on 3 main principles:

The first principle: Democracy.

The organic global currency is built and operated by and for all countries in the world. No key currency owner that owns and makes international currency and other countries only use and must buy international currency, just to involve in international trade. No country that makes policies and others can only follow and adapt. All countries are involved in building, deciding, and using a shared-currency. All countries have the same voting rights, have the same control, proportional to the amount of OGC they use.

Second principle: Organic

Organic global currency does not stand-alone but is part of the national currency system. Organic global currency is not a foreign currency (foreign element) as it is now. The OGC international currency is 100% backed up by the national currency system and vice versa. National currencies and international currency can be converted to each other, without going through transactions so that they do not incur costs.

Third principle: Active

The organic global currency is not just issuing money and then giving everything up to the market. Because in practice, market forces without balancing factors are mob-law or lawless. Organic global currency has an auto-balancing system that is very active in maintaining the balance of all monetary systems in the world.

2.    Shared Currency

The main principle in organic global currency is a democracy, which is the main differentiator with the current system, namely tyranny. Democratic currencies mean currencies that are made together, shared together, and controlled together.

All Members are Owners

All member countries share ownership, control, and participation. There is no more one country or several countries controlling the international currency system while other countries only use and must adapt whatever policies are made by key currency owners.

All countries have the same position, the same rights, and the same vote proportionally. Proportion is based on the number of Glob currency they use.

All Members Get Protection

Organic global currency does not only issue money, but is active, including in terms of protecting all member countries when they experience a monetary crisis.

The current global monetary system is passive. When the monetary policies made by the owners of key (international) currencies depressed the global monetary and then adversely affected the country’s monetary system, there was nothing the key currency owner could do. Countries that experience adverse effects must fight alone.

3.    Free Money

In a democracy, all things that be made together are FREE for all. Likewise with currency. Because the OGC is a shared, made, and used together, the OGC is free money for all member countries.

This is different from the current global monetary, where the international currency (US Dollar or Euro) must be purchased, not free. And they have to buy it with real goods and services. Or buy paper with gold.

4.    Open Membership

As a democratic currency system, OGC membership is fully open, even far more open than the current regional (union) currency, such as the Euro. To join a union currency such as the Euro, prospective member countries must meet the requirements for integration of economic activity and uniformity (OCA properties). Whereas to join the OGC, all countries in the world can join immediately. No economic integration needed. All countries in the world, with their current conditions, are eligible to join the OGC.

The organic global currency is a fully democratic system; accept all differences; regardless of regional differences; economic level and monetary policy differences; and any other differences. All countries in the world can join immediately with their current conditions.

The OGC model is designed to accept and accommodate all differences in economic conditions in all countries in the world.

5.    Closed system

Figure 1. Organic global currency is a closed system.

The organic global currency is a closed system, which is only used among fellow member countries and cannot be used outside of member countries. Why is it closed?

First, because when used outside the member country, Glob will turn into a tyrannical currency and absorb the wealth of the countries that use it. OGC is a democratic currency system and may not turn into tyranny.

Second, all the advantages possessed by organic global currency as explained in the Solving The Problem are only effective if used in member countries. When used outside a member country, these advantages become ineffective.

Currency cannot be borrowed nor adopted. When borrowed outside its territory, it will behave like foreign currency (foreign element) and cause friction with the national currency system.

In terms of usage, the OGC model is closed. But in terms of membership, the OGC is fully open, more open than all the common currency models that exist today. So if certain countries want to use OGC, just register to become a member. And suddenly, all facilities in the OGC model can be utilized.

6.    Organic

Organic means part of an organ or body. Organic global currency is not a stand-alone system, but is a part (organ) of the national currency system of each member country.

Extension

The organic global currency is not a stand-alone currency, but is an extension of the national currency system. The purpose of the extension is that the national currency system can conduct transactions with other countries.

Figure 2. The organic global currency is an extension of the national currency system

As an extension, OGC is 100% guaranteed by national currency. Each OGC currency unit issued in each member country is guaranteed by the national currency in that country with a guarantee system of “one floating value”.

Hybrid

OGC currencies and national currencies are hybrid or interchangeable. The OGC currency and the national currency store the same value, but different functions. National currency for domestic transactions while OGC for transactions between member countries. As hybrids, national currencies and OGC currencies can be converted to each other without affecting domestic monetary and without creating any cost. In theory, conversion from national currency to OGC or vice versa doesn’t affect the rate and without spread, or zero volatility and zero spread.

7.     Guarantee System

Following organic principles, each outstanding Glob currency is guaranteed 100% by the national currency system. How does this guarantee system work? This is it.

Figure 3, Mutual guarantee between OGC and national currency

The Global Bank sends OGC to member countries’ central banks as much as they need, free of charge. Then, as a guarantee, the member country’s central banks send the national currency to the Global Bank for every OGC money they got. Furthermore, the national currency is kept by The Global Bank and has never been circulated so that there is no cost at all in the economy and monetary terms.

One Floating Value

The value of the OGC currency issued to a member country is always the same as the guaranteed national currency value. If the national currency decreases (depreciates) against the OGC currency, the local central bank will send its shortcomings to The Globe so that the value is the same again. Vice versa. If the national currency increases (appreciates) against the OGC currency, then The Globe will return the excess so that the value is the same again.

This one-value floating system provides certainty and assurance of value for The Globe to member countries and vice versa for member countries to The Globe. This assurance of guaranteed value makes every outstanding Glob always credible and 100% guaranteed by and for all member countries.

Guaranteed each other

The Glob and national currency guarantee system is a mutual guarantee. The national currency guarantees the value of Glob circulating in its territory. The amount of the guarantee (national currency) deposited to The Globe. On the other hand, OGC guarantees the transferring value of the national currency to other countries as much as Glob circulating in their country. This mutual guarantee makes Glob an (organic) part of the national currency system and at the same time becomes a liaison network with other member currencies.

8.   Control System

Direct Control System

Unlike the current monetary system, the OGC controls the amount of the currency in circulation not using interest rates, but directly or direct control.

National central banks can control Glob in circulation with national currencies. To issue Glob, local central banks sell Glob to the public using national currency. The revenue from selling OGC become seignorage for the country concerned. And vise versa, to reduce Glob from circulation, the national central bank buys Glob from the public with the national currency. Withdrawal fees (negative seignorage) are charged to the country concerned. Therefore, no interest rate needed.

Figure 4. The direct control system of the Glob circulation

This control system is called the direct control system. This direct control system becomes the main monetary control.

9.    Digital

OGC is a digital currency, using modern cryptography and decentralized technology.

Digital currency requires devices and networks for transactions. For this reason, a shared digital network is needed that can be used by all countries and used as a backbone. The Globe, local central banks, commercial banks, financial institutions, and all devices, are all connected with the shared and jointly managed backbone network.

Below are some of the important advantages of digital currency with current technologies compared to paper-printed currency.

Fully recorded

In the paper-printed technology, money records are only carried out in banks or other financial institutions. Thus, recording circulating paper money can be monitored only to the bank level. Paper money circulating after the bank level, or in the public can only be assessed with a sampling method.

While digital technology, all money is entirely in the network. Each unit is always monitored and recorded. No single unit of digital money that is not monitored throughout the world, at all levels, starting from the central banks, commercial banks, financial institutions, economics agents, all devices operated by every person or institution or machine (robot) in the world.

With this system, The Globe can create a recording, calculations, expectations, simulation, with a very high degree of accuracy.

Fully controlled

In digital technology, all money can be controlled up to per unit. No single money in the world out of the system. All money in the system is monitored. Thus, illegal transactions are not possible at all levels in the globe.

With such a system, digital money cannot be stolen. Because all illegal transactions that can be legally proven can be reversed or returned. The security level of digital currency can be made much higher than the paper money currently available. Since digital money exists only in a shared backbone network, no exit door for theft or illegal transactions at all levels.

More efficient and fast

In digital systems, you can send money directly in the form of ‘physical’ money. Thus, physical or complicated reconciliation (just like today) is not needed. You can transfer money just like sending an email. If any reconciliation is needed, since all records are done automatically and digitally, then reconciliation can be done completely digitally and auto, without the need for human touch anymore. All money can be sent from one country to another at the speed of light. This can speed up transfer times thousands of times, reducing the time from 3 days to a few minutes or even seconds. Costs will reduce many folds.

Cryptographic technology used in the OGC model is generally the same as that used in existing cryptocurrency such as Bitcoin and its friends. But, of course, OGC is totally different from Bitcoin and its friends. Because OGC is officially established and operated by countries (governments). Bitcoin and friends are made to not be controlled. In contrast, the OGC model, with the same technology is made to be fully controlled.

10.      Decentralized

A decentralized system is a system that is built without a center and all parts are inter-connected. This system promises a far more powerful than a centralized system because there is no dependence on a single system. A decentralized system means that all parts are connected and cooperate without the need for a center. This avoids the system from fatal failure because there is no dependence on a certain part(s). If there is a part of the system that fails then the other part(s) will still function normally.

Figure 5. The decentralized system in OGC

11. Value

Glob value is always the same all year all the time or zero depreciation.

One important goal in the organic global currency model is to perfect the function of money as a very stable value-bearing or storage device, far more stable than all currencies that have ever existed on the planet. So, to achieve that noble goal, Glob must be super stable, both in the short and long term, or even a very long time, or we call it “zero depreciation”.

To be super stable, we make the global price index as an anchor. This means that the global price index with the Glob currency is always the same or always = 100, or zero depreciation.

Figure 6. Glob benchmark-value graph using the global price index

Based on the super stable concept by following the price index, the Glob Value Equation is as follows:

GV = K.PI if PIn-1 – PIn = 0 / ∆PI = 0

GV: Glob Value

K: Constant (set when the first value of Glob is set)

PI: Price Index

PIn-1: Price Index of the previous year

PIn: Price Index for the current year

∆PI: Change in Price Index

With this model, the value of Glob will always follow the weighted average of all prices of goods and services that are tradable in the world or global price index. This global price index is the most real and most representative picture of the value of goods and services throughout the world economy. With this model, the value of Glob this year will remain the same as the value of next year, or the next 10 years, or 100 years to come.

12.       Amount

The number of Glob issued to all member countries is based on the needs of all members for transactions between them. Transactions between members consist of trade, investment, and other transfers.

To calculate money needs more accurately we can use Irving Fisher’s money equation as follows:

MV (Value of money) = PT (Economic value)

M: Money

V: Speed ​​(money circulation)

P: Prices of goods and services

T: Number of transactions

Because Glob is only used as an international transaction, PT (economic value) is replaced by PT (international transactions).

Glob is entirely digital money so that all circulation is monitored to the level of every single unit in the world. The Globe can easily calculate all variables in the equation above and then determine the desired Glob value precisely.

Money needs index

With comprehensive and real-time global price index data, the amount of currency in circulation and its accurate speed, the value of Glob can be precisely determined.

With comprehensive and real-time calculations, The Glob can index money needs in each country. Local central banks can use the money needs index as a benchmark for Glob circulation control.

13.       Exchange rate

There are two models of exchange rates that exist in the world today. The first is a floating rate, which is to give the exchange rate upon the money market. And second, fixed rates, which is by pegging the national currency exchange rate against the main (international) currency based on the provisions of the central bank or the government.

The OGC model does not use both types of exchange rates above. The OGC model uses its own exchange rate system called the auto-balancing model. As in determining the OGC value that uses a price index, the exchange rate also uses a price index. How does the exchange rate use a price index? The trick is “the exchange rate of OGC with a national currency is set when the national price index is equal to the global price index“. It seems rather difficult to understand this exchange rate model. This part is somewhat advanced. To understand it easily, let’s slowly follow the explanation below. We start with the graph.

Figure 7. National currency and Glob benchmark chart uses local and global price indices

The auto-balancing rate is when the global price index = local price index.

If written in the form of an equation it will be like this,

GV = E.MVLocal if PIGlobal = PILocal

GV: Value of the Glob currency

E: Exchange rate

MVLocal: Value of national currency

PIGlobal: Global price index

PILocal: Local price index

The exchange rate between the OGC currency and the national currency is set when the national price index of the member country is the same as the global price index. As seen in the bell chart above, the top of the local price index chart (bottom) is connected by a blue straight line with the top of the global price index chart (above). The straight blue line connecting is the exchange rate. That means the local price index and global price index are the same, or equal. In other words, the average price of goods and services in the domestic market is equal to the average price of goods and services in the global market.

Supposed we have money 100 denominated in the national currency (for example 100 IDR). Then we exchange it with the OGC international currency with an auto-balancing exchange rate and get 50 OGC. Then we buy goods on the global market 50 OGC. At the same time, our friend buys goods in the local market 100 IDR.  Our goods that purchased in the global market and our friend’s goods that purchased in the domestic market are more or less the same. So, 100 IDR (denominated in the national currency) value that we use to buy domestic goods and 50 OGC (denominated in OGC) that we use to buy goods in the global market, the results of the goods obtained are the same or almost the same.

What are the consequences when the domestic price index is the same as the global price index? We depart from the theory of international trade.

In the theory of international trade, people will prefer imports from global markets when the price of (the same) goods in the global market is cheaper than in the domestic market. And conversely, people will export domestic goods to the international market when the price of domestic goods is cheaper than the global market. Thus international trade takes place. All economic agents look for cheaper goods and services. Cheaper imported goods will replace more expensive domestic goods. And cheaper domestic goods will enter the global market replacing more expensive global goods.

When a national price index in a country is lower than the global price index, then it means the average price of goods and services in the country is cheaper than the global market. It means that a large number of domestic goods and services are cheaper than the global market. As a result, the country will export many domestic products to the global market. In contrast, only a few goods in the country cost more than the global market. As a result, the country only imports small quantities of goods from the global market. This country will be an exporting country or a net exporter. The trade will be surplus.

Conversely, when a country’s domestic price index is higher than the global price index, then the condition will reverse with the previous country. And countries with a national price index higher than the global price index will import more than their exports. The country will become a net importer. This country’s trade will be a deficit.

Figure 8. Export power and import power when the local price index is the same as the global price index

What if the domestic price index is the same as the global price index? Look at the picture above. In theory, if the domestic price index is the same as the global price index, then the country’s trade will tend to be balanced. The amount of exports and imports tends to be equal. The balanced international trade condition is ideal in terms of global economic balance. The auto-balancing model aims to achieve such an ideal condition. As the name implies, auto-balancing seeks to keep global trade in a near to perfect balanced position.

So, the degree of the domestic price index and the global price index indeed affect international trade. The more unbalanced the national price index with the global, the more unbalanced is the international trade of a country. And conversely, the more balanced it is, the more balanced the international trade.

We back to the graph and the equation above. The exchange rate of the international currency OGC and the national currency is set or determined when the national price index is the same as the global price index. At that position (national price index = global price index), the country’s trade power is balanced with the power of global trade. Thus, the country’s international trade is balanced.

If a country experiences inefficiency, for example, production costs increase because labor costs rise, the price index in that country will rise. Thus, the price index in the country is higher than the global price index. If this is allowed, and global monetary do not take necessary adjustment just like today, the country’s export power will decrease. And conversely, the import power will increase. The country will become a net importer and experience trade imbalances.

The auto-balancing exchange rate model will respond to the case above, by lowering the country’s national currency exchange rate against the OGC currency. Thus, the national price index will fall back and equal the global price index. Thus, the power of the country’s international trade will be balanced again.

The flow is more or less is like this:

First, there is an increase in labor costs so that production costs generally rise.

Production costs rise => national price index rises => trade power weakens

Then auto-balancing will respond,

The national currency exchange rate against the OGC falls => the national price index decreases => the national price index returns and be equal again to the global price index => trading power returns to normal (balanced).

So, the exchange rate of the auto-balancing model will always make the national price index and the global price index the same. Thus, the trade power of the country will always be the same as the power of global trade. Therefore, the country’s international trade will also always be in a balanced position.

If all countries use an exchange rate model like this, the trade in all countries will always be balanced. Countries that have strong export power (very high production efficiency) such as powerhouse countries (China, Japan, Germany, etc.) and countries with low export power (very inefficient), their positions will always be the same.

When visualized, the competitiveness of all countries in the world will look like the picture below:

Figure 9. Visualization of the competitiveness of all countries in the auto-balancing exchange rate model

It doesn’t matter ho big or how small a country is, its international trade competitiveness will always be equal to the global trade competitiveness.

It doesn’t matter how efficient or how bad any country’s production system is, its international trade competitiveness will always be equal to global trade competitiveness.

Flexible to fundamentals

By pegging the exchange rate to the price index, auto-balancing makes the exchange rate follow the actual economic fundamentals more than the floating rate currently available. Floating exchange rates are currently flexible by following the balance of the money market. And the money market is influenced by many factors that create a gap between exchange rates and fundamentals. This gap then causes fluctuations and volatilities.

Whereas in the auto-balancing model, the exchange rate fully follows the price index or follows the actual fundamentals. The gap between monetary and fundamentals is gone. So, in theory, auto-balancing models can also eliminate exchange rate fluctuations. No fluctuation in currency exchange rates in the OGC model and auto-balancing embedded.

In current global monetary, we only have one choice between two; flexible but volatile exchange rate (floating exchange rate) or stable (nonvolatile) but inflexible (fixed exchange rate). There is no way to reach both at once. While OGC with auto-balancing embedded, can reach both at once; flexible and not fluctuates.

With a flexible exchange rate model to economic fundamentals, more flexible than current floating exchange rates, the OGC model does not require Mundell’s optimum currency area (OCA) properties.

OCA Mundell’s theory states that union areas using common currency must meet the requirements of economic integration so the integration not to cause asymmetric shock. Areas that do not meet the criteria should use floating exchange rates to remain flexible.

The OGC model uses auto-balancing exchange rates that are fully flexible to fundamentals. Thus, economic integration is not needed.

14. Quad Zero

With the work principles as mentioned above, the OGC model has quad zero characteristics: zero depreciation, zero volatility, zero spread, and zero interest.

Zero depreciation

As explained above, the value of the OGC currency is pegged using a global price index so that the value is always the same all the time or zero depreciation. Today’s value, next year, 10 years to come, even 100 years to come will always remain. Not eroded at all.

Zero volatility

By pegging the price index, the exchange rate of the OGC with the national currency fully follows the economic fundamentals of each member country. There is no gap between the value of money (monetary) and economic value (fundamental). Thus, the fluctuation is gone, or zero volatility or zero fluctuation.

Zero spread

Spread is the space between the “bid” price and the “ask” price at the exchange rate. The more volatile, the greater the risk and thus the greater the spread. When fluctuations are eliminated, the spread may also be theoretically eliminated as well. This is possible if the conversion of OGC and national currencies is carried out directly by the central bank. Since the network of the OGC (backbone) is operated by the central bank, no other costs are taken from the spread. Conversion margin can be completely eliminated (zero spread).

Zero-interest

OGC circulating control is carried out directly by the central bank using the national currency. Thus, interest is not needed at the central bank level. So the OGC currency at the central bank level is zero interest.

With the characteristics of “quad zero” above, the OGC currency has characteristics close to “perfect currency”. With characteristics that are close to perfection, the OGC currency will easily replace the existing international currencies (US Dollars and Euros).

15.       Full Conversion and back up

The OGC quota for every member county above is not really the limit of Glob usage. So member countries are still possible to use Glob beyond the quota. Quotas are only used as benchmarks or milestones.

When the national currency system of a member country experiences a public distrust it will usually cause a rush and a monetary crisis. To prevent this, the OGC system opens a conversion and back up system.

The purpose of the conversion system is:

  1. Replacing the local monetary system, which collapsed with the OGC monetary system in the country so that economic activity continued normally.
  2. Making the isolation so that turmoil in the country does not spread to the entire system of the OGC.

After economic activity recovered, The Globe will help the country to rebuild its monetary system and slowly turn back the Glob currency to the national currency again.

This 100% back up and conversion system is actually more preventive. When public confidence in the local monetary system decreases, the presence of 100% back up from the OGC will make that trust recover. Although the community does not believe in local monetary, they can still trust the OGC’s monetary system. By recovering the trust, most of the crisis problems have actually been overcome.

The UGC is a 100% democratic system. No one left behind.

Wallahu a’lam.