Use case of linking a managed basket of fiat currencies to crypto-tokens

Abstract

The number of crypto-currencies is increasing fast. On one hand, following the launch of Bitcoin in 2009, more than 1000 different crypto-currencies are listed in the crypto-currency markets. On the other hand, solutions like eCurrency exist to effectively create digital fiat currencies. There are solid economic reasons to introduce an optimized basket of fiat currencies as well, along the lines of the International Monetary Fund Special Drawing Rights, particularly for entities with global assets and liabilities or for individuals wishing to protect their purchasing power in a more and more global and multipolar world. Up to now this kind of solution was only accessible to a few large institutions due to the structure of the foreign exchange market. The main original contribution of this paper is to present the first use case of linking a managed basket of fiat currencies to a new crypto-token. The tokenisation and the use of blockchain will enable us to make it accessible to any individual gaining diversification while benefiting from good liquidity and low cost. After reviewing recent digital fiat currencies initiatives, we explain the economic rationale of our optimized currency basket and its effective implementation by means of an existing blockchain-based distributed computing platform, i.e., Ethereum. Our technological approach enables a wide range of uses of our currency basket, which would not be possible without crypto-tokens.