DeKo: An Electricity-Backed Currency Proposal
January 4, 2011
Currencies play an important role in facilitating trade and economic growth. Shifts in currency values may lead to economic dislocations deleterious to trade and growth. Most currencies are issued by government central banks. These central banks hold assets in the form of government debt and gold against the currency they issue.
Alternatives to traditional debt and gold assets may make sense for central banks to hold as a supplement or substitute. One alternative asset for a central bank to hold consists of electricity delivering assets. Electricity delivering assets don’t need to be physical assets such as fuel or power plants, but rather may be claims in the form of standardized Power Purchase Agreements for the delivery of electricity from power producers.
Electricity delivering assets can hold their economic value more effectively than gold or debt due to price stability and resistance to devaluation from over-issuance. The DeKo-backed currency concept advocates a portfolio of diversified electricity delivering assets that offers more social benefits than gold and retains monetary value better than government debt.
Number of Pages in PDF File: 35
Keywords: currency, economics, finance, energy, stability, macroeconomics
JEL Classification: A10, E42, E51, E58, F02, F31, H56, H62, L94, L90, L97, O23, Q20, Q30, Q38, Q4, Q40, Q43, Q42
Date posted: April 7, 2011 ; Last revised: July 5, 2012