Monetary Policy Proposal #4 Rationale from EmergenceOfMoney

TL;DR: First priority is anchoring expectations at our long-term perspective and our focus on stability: thus

  • no rebases
  • no random inflation
  • a long(ish) 100-day horizon for Lockups. Interest Rate set to “indifference benchmark” avoids pressures up or down.


  • The new trustee board signals vividly its commitment to ECO’s mission: long-run value generation + stability.
  • We start a process of communicating to the Ecommunity how we believe to carefully foster that mission via our available actions.
  • Don’t rock the boat economically in the first policy cycle.

Concrete Proposal:

  • Only a lockup for 100 days at 5.6%, no other measures.

Why 100 days?

  • We want to signal that we care about the long run; starting with a 30-day policy does not send that message. We should at least span one quarter; for psychological reasons 100 days is better still (visually, amounting to vesting until May 1st, and aligning us with end-of-month).

Why 5.6% = 3.2% + 2.4%?
The main purpose is to send 3 clear signals important at the outset:

  1. ECO is not USD-centric (or any other fiat)
  2. We do not pursue an agenda other than the long-term objective.
  3. Our actions are measured to what we know.

How does this proposal address these point?

  1. It avoids data from any one fiat currency. No USD interest rates, no Eurozone inflation rates! The 3.2% are thus the 3-month rate on the SDR basket.[*]
  2. We stay clear from pushing towards appreciation or depreciation so soon. Thus the 2.4% markup is a risk premium carefully chosen[**]. The point is to NOT provide incentives pushing moves into fiat/ECO at this point in time. Staying “passive” also addresses point
  3. , which implies to definitely avoid “courageous” measures right now: emphatically no rebase and also no random inflation in the 1st cycle!

Bottom Line: For the first cycle, our focus should be to build trust and reputation as a monetary policy trustee committee aiming for stability and long-term growth. So let’s not induce wealth transfers before we know what we are doing – and the Ecommunity knows that, too!

For the creative community: Here’s the motto starting 25:00 - Cryptocurrencies: Last Week Tonight with John Oliver (HBO) - YouTube

[*] Special Drawing Rights from the IMF, arguably the most prominent attempt at getting a basket not determined by any one fiat currency.
[**] Yes, we can debate “appropriate” extensively: I propose the 2.4% of BBB-rated corporate bonds in Emerging Markets. BBB b/c it’s investment grade; corporate b/c is more an enterprise than a state; bonds b/c clearly that’s the claim offered; and EM b/c the Economy is definitely such!
Data: ICE BofA BBB Emerging Markets Corporate Plus Index Option-Adjusted Spread (BAMLEM2BRRBBBCRPIOAS) | FRED | St. Louis Fed


Thanks for putting things clearly, with summary, headings and sources! Makes it much easier to read and reason against the other proposals

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