The Digital Currency Monetary Authority (DCMA) has announced the launch of an international central bank digital currency (CBDC) known as the Universal Monetary Unit (UMU), symbolized by the ANSI Character Ü.
This currency, also known as Unicoin, is designed to transact in any legal tender settlement currency and will function like a CBDC to enforce banking regulations and protect the financial integrity of the international banking system.
The UMU adopts a central banking monetary policy framework, ensuring continuous purchasing demand, minimal price volatility, and annual asset pricing targets.
The DCMA hopes that UMU serves as “Crypto 2.0” through the introduction of new cryptographic technologies for realizing a digital currency public monetary system with a widespread adoption framework encompassing use cases for all constituencies in a global economy.
Through the adoption of a global localization public monetary system architecture, UMU can be configured to operate according to the central banking regulations of each participating jurisdiction.
Banks will be able to utilize the new currency by attaching SWIFT codes and bank accounts to a UMU digital currency wallet, enabling them to conduct SWIFT-like cross-border payments entirely over digital currency rails, accessing the best-priced wholesale FX rates, and achieving instantaneous, real-time settlement while bypassing the correspondent banking system.
UMU is designed to support central banking and regulated financial institutions. It utilizes a staked proof of trust (SPOT) consensus protocol, along with a “multi-dimensional DLT (mDLT) capable of supporting any asset or liability ledger enabling full-service digital banking and international trade payments.”
Merchants and trading partners will be able to accept UMU as a form of payment for their goods and services priced in any national legal tender.
UMU has premium exchange rates built into its wallet and can convert any settlement currency amount to the equivalent UMU amount.
The DCMA hopes that UMU will mitigate against seasonal and systemic local currency depreciation and function as a payment currency at the time of settlement.
In the proposed UMU Model Law legislation, Unicoin would be enacted as a complementary money commodity and function as a store of value.
While the IMF has not made any official endorsements of UMU, it has yet to state any objections to UMU’s FX premier rates and its monetary sovereignty approach, according to George Walker, a Partner at Practus, LLP, who facilitated weekly meetings between the DMCA and the IMF where the whitepaper for the project was discussed.
Overall, UMU has the potential to transform cross-border payments, foreign exchange transactions, risk sharing, and financial contracting while strengthening the international monetary system and providing economic and financial stability to member states.
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