A Self-Balancing, Self-Stabilizing, and Self-Sufficient International Monetary System

This paper proposes a shared international monetary system (IMS) that can be self-balancing, self-stabilizing, and self-sufficient. We call it an “organic system”. The organic system issues a cross-border means of payment called “organic currency”. Organic currency is only for international transactions between member countries. Domestic transactions continue to use their respective national currencies. Non-member countries cannot use organic currency. Organic and national currencies are interchangeable using an “auto-balancing” exchange rate that follows the fundamentals and neutrality of the foreign balance sheet of each member country. We utilize a 3-dimensional simulation of trade and investment involving 5 countries, 20 products, and a 12-month (5x20x12 model) to test the workability of the system. The results show that this model could provide international liquidity to all (member) countries in the world sustainably and efficiently, make the IMS naturally self-balancing and self-stabilizing, and make the current accounts, balance sheets, and FX reserves of all member countries tend to be self-sufficient. We implant a digital and decentralized system in the very core of the system, which works semi-automatically. This system is flexible; it can start from anywhere in the world and any country may join.