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UNREGULATED PERIMETER Shadow Banking
REGULATED PERIMETER
ISSUED MONEY/ LIABILITIES
Liquidity crunch
- Scarcity
+ Scarcity
In expansionary periods the area of each level increases and in contractionary it is reduced
Expansion
Contraction
End users access startsHERE!
Softest Money/ Asset
Hardest Money/ Asset
OfficalPayment SystemSettlement Units
Regulated Money of the Payment System
L4
L3
L2
L1
L0
Non-redeemable
Fiat Stablecoins (Eurodollars)
NON-ISSUER Nobody's liability
DECENTRALIZED PROTOCOLS
INTERNATIONAL BANKS/ FIs NON-FINANCIAL INSTITUTIONS
U.S. BANKING SYSTEM & U.S. TREASURY
CENTRAL BANK
Stablecoins/ Flatcoins (Cryptodollars)
Retail rCBDC & Wholesale wCBDC
Tokenized Deposit Stablecoins
Outside Money/ Commodities
Monetary System Brief Overview
USD
Digital Money issuers pyramid
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FlatcoinsPROS & CONS
Decentralized StablecoinsPROS & CONS
Mutual Yieldfrom assets
Overcollateralized buffer
Crypto LP or/and LSD tokens
Cryptocurrencyexogenous
Inflation Rateconnector of the relationship
RWA tokenized
Flatcoin tokens
Cryptocurrency endogenous
Equity for the CDP
Fiat-Backed Stablecointokens
Decentralized Stablecoin tokens
Reserves composed of one or combinations of these assets.
Price Peg OR #Tokens Increase
Flatcoins have a periodic yield target:Yield % = Inflation %
Insurance buffer
Brief Explainer
Assets/ Money mutualized by the token holders
Digital Money IssuedDLT/ Blockchain
LIABILITIES
ASSETS
DEC. STABLECOIN/ FLATCOIN ISSUER BALANCE SHEET STRUCTURE
Challenges & Distortions
3. Money creationBoosting bank reserves and creating deposits via loans
2. Hierarchical access & privilegesAccess & privileges vary by agent type at each pyramid level.
1. Hierarchical structureCredit issuance with a % of harder assets on reserve
t1
t1
t0
t0
USD
USD
EUR
USD
USD
USD
Purchasing Power (Price Level)
Money supply
Main Policy Toolbox1. Setting S/T policy interest rate (P1) 2. Influence S/T policy rate range via OMOs.
Main Policy GoalStabilizing the (P3) relationship:
Credit created & distributed through competitive financial markets.
USD
Dealers by level(L1) Central Bank Liabilities(L2) Banking System Liabilities (L2) Govenment Liabilities (L3) Private Sector Liabilities
Secondary dealersTrade on secondary markets
Primary dealersDirect market access to issuer's liabilities
US GDP
Non-redeemable since commodity standards collapse
Outside Money
Foreign Exchange = Price between currencies. Ex: EUR/USD
L2
JPY System
EUR System
USD System
4. Dealers between hierarchies
3. Limited policy toolbox
2. Credit-Based, Fractional Reserve Hierarchy
L1
1. Four Prices of Money
Exchange rate (P4)
Price level (P3)
Par price (P2)
Interest rate (P1)
The world monetary system, a Dynamic Cone defined by hierarchical Currency Pyramids expanding and contracting over time. Competing pyramids where those with larger areas, like the USD, represent dominant world reserve currencies.It is a Hierarchical System both within each currency and between different currency systems.
MAIN FEATURES OF INDEPENDENT PYRAMIDS CURRENCY SYSTEMS
WORLD MONEY SYSTEM BRIEF OVERVIEW
Brief Explainer
- Bitcoin (BTC)_Ledger 1.0
- Ethereum (ETH)_Ledger 2.0
- Radix (XRD)_Ledger 3.0
- Litecoin (LTC)
- Bitcoin Cash (BCH)
- Cardano (ADA)
- Polkadot (DOT)
- Chainlink (LINK)
- etc.
DIGITAL COMMODITIES
PHYSICAL COMMODITIES
OUTSIDE MONEY PHYSICAL & DIGITAL COMMODITIES
- Gold
- Silver
- Bronce
- Crude oil
- Natural gas
- Wheat
- Corn
- Coffee
- Sugar
- etc.
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Mortgages
Equity Securities
Bank loans + Debt Securities
Value created ex-nihilo by the issuer
Profit made by the money issuer
Digital Money IssuedDLT/ Blockchain
Repurchase (Repo) agreements
Capital/ Private Seigniorage
Traditional deposits:- FDIC Insured - Non-FDIC Insured
LIABILITIES
ASSETS
Tokenized Deposit Stablecoins
BANKING SYSTEM CONSOLIDATED BALANCE SHEET STRUCTURE
Loans
Gov. + Private Securities
Pyhsical Cash/ rCBDC &Bank Reserves/ Deposits
Reverse Repos
Outisde Assets
Wholesale wCBDC
The reserves include bank-issued deposits and may also consist of one or a combination of other assets.
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Brief Explainer
Profit made by the money issuer
Digital Money IssuedDLT/ Blockchain
Equity/ Private Seigniorage
LIABILITIES
ASSETS
Fiat-Backed Stablecoin tokens
FIAT BACKED STABLECOIN ISSUER BALANCE SHEET STRUCTURE
Yieldfrom assets
Other Assets
S/T Private Debt Securities
S/T Gov. Debt Securities
RWA/ tokenized
Traditional Deposits
Tokenized DepositStablecoins
98.9% of total Assets:U.S. Federal Reserve System
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Commodities
Reverse Repos
Gov. + Foreign Official Accounts
Capital/ Public Seigniorage
Bank Reserves/ Deposits
Physical Cash
Wholesale wCBDC
Retail rCBDC
Base MoneyM0
Central BankLiquidity Swaps
Value created ex-nihilo by the issuer
Profit made by the money issuer
Repurchase (Repo) agreements
Digital Money IssuedDLT/ Blockchain
Private Debt/EquitySecurities
LIABILITIES
Gov. Securities
ASSETS
Commercial Bank Loans
FX Reserves & SDRs
CENTRAL BANK BALANCE SHEET STRUCTURE
CREDIT
OutsideAssets
