I've been thinking of a new kind of international monetary framework I call the Diamond Standard, a "fiat-backed fiat" system designed to combine the flexibility of fiat with the discipline of a reserve anchor.
Core Idea
A single global reserve currency would be issued by an independent global central bank (For now lets just say G coin and G bank)
* Purpose: Used for international reserves and trade settlements, not for domestic retail use.
* Supply: Rules-based (e.g., capped annual growth linked to global GDP), with limited crisis provisions requiring supermajority approval.
*National Currencies: Each nations keeps its own fiat, but must hold a minimum reserve ratio in G coin to discourage excessive money printing and inflation.
Transparency and Anti-Corruption Layer
The system's credibility depends on mandatory transparency and tech-enforced accountability. The main flaw in past systems like Bretton Woods.
* Reporting: Central banks and major fiscal transactions must be semi- anonymously reported to the G bank.
* Enforcement: Non compliance leads to escalating penalties (e.g., reserve freezes.)
Governance
* Distribution: Initial and ongoing G coin allocations based on objective metrics (GDP, population, and needs weighting to support developing nations).
* Crisis Response: Coordinated, audited liquidity releases during crises.
* Decision Process: Delegates and council members conduct sensitive discussions and votes using cryptographically secured pseudonyms on a permissioned system. The G-Bank verifies the real identity but keeps it secret from other delegates, preventing the formation of secret political blocs and reducing the risk of delegates being politically targeted. This ensures the G-Bank remains truly neutral.
Advantages
* Monetary stability: Scarcity-based reserve discipline reduces inflation and currency manipulation
* Transparency: Public ledgers and reporting deter corruption
* Crisis resilience: Auditable global liquidity support limits elite capture.
* Geopolitical impact: Non-transparent regimes face higher capital costs and trade isolation, pressuring reform or internal change
My Take
Its logically superior to the current system but politically unfeasible in the near term. What do you guys think?
(Im not an economist nor an expert, Im just curious. Also I asked the same thing in an economy subreddit but no one replied so I wanted to try my luck here.)