The Digital Currency Monetary Authority unveiled an international CBDC-like digital coin designed to speed up cross-border transactions
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Introduced at the spring meeting of the International Monetary Fund, on April 10, the authority’s Universal Monetary Unit (UMU) is an international version of a central bank digital currency (CBDC).
UMU symbolized as ANSI Character, Ü, is “legally a money commodity, can transact in any legal tender settlement currency, and functions like a CBDC to enforce banking regulations and to protect the financial integrity of the international banking system,” the DCMA explained in a news release.
The regulated international crypto is supposed to strengthen the monetary sovereignty of participating central banks. Besides, it complies with all the recent crypto assets policy recommendations proposed by the IMF.
The DCMA pointed out that participating banks can attach SWIFT codes and bank accounts to a UMU digital currency wallet to conduct cross-border payments over digital currency rails, in a manner similar to the international SWIFT network. At the same time, they will bypass “the correspondent banking system at best-priced wholesale FX rates and with instantaneous real-time settlement.”
To stimulate continuous demand for Unicoin, which is what the crypto token corresponding to the UMU is called, the Unicoin protocol will offer banks and wallet holders the best cross-border FX rates. Central banks will increase and decrease interest rates accordingly, to stimulate Unicoin demand and contract their money supply.
Depending on the continuous demand, the Unicoin monetary policy committee (UMPC) policymakers will determine the effective FX discount rates. It will generally range up to 5% to current intrabank (wholesale) FX rates.
Having the unique global localization public monetary system architecture, UMU can be configured to operate according to the central banking regulations of each participating jurisdiction.
The innovative monetary unit has its legal aspects drafted in collaboration with several sovereign states. In the proposed legislation, UMU should not be used as a legal tender for negotiating domestic prices or international trade agreements.
Instead, it should be enacted as a complementary money commodity for the store of value, not disrupting the existing monetary systems, but mitigating against potential seasonal and systemic local currency depreciation. Therefore, UMU must be tendered as a payment currency at the time of settlement.
