Universal basic income that distributes stablecoin investment income with central bank bonds as collateral
Summary
- A summary
This model proposes a system design that provides universal basic income (UBI) to all citizens based on the operating income of stablecoins secured by central bank bonds. By breaking away from the traditional government and central bank-centered asymmetric financial structure and incorporating the public’s credit creation authority, we will realize an equal financial system in which the currency circulates.
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- Background and issues
In the traditional financial system, the right to create credit is concentrated in the government and central banks, and the following problems are manifested:
• Income disparity and credit circulation bias
• Delays and inefficiencies in economic adjustment
• Lack of economic autonomy of the people
UBI not only serves as an aspect of social security, but also as a stabilizer for economic circulation and credit distribution.
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- Basic concept
3.1 Equal financial structure
Adopting an equal credit creation model of “government + central bank ⇄ people + government bank”. The people also create credit as financial participants, and the currency circulates without lingering.
3.2 Circular national finance
• Government-side functions: currency issuance, fiscal expenditure, macro adjustment
• Public-side functions: Credit creation, investment and consumption, and governance participation through decentralized finance
• Government banks: Financial infrastructure that supports credit creation on the public side
3.3 Multifunctionality of UBI
UBI is not just an income guarantee, but also responsible for the following:
• Initial allocation of credit
• Automatic stabilization device for the economy
• Correction of disparities by reverse tax collection function
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- Financial resource structure
4.1 Stablecoins secured by central bank bonds
Stablecoins issued as collateral for central bank bonds are managed, and the investment profits are used as the source of UBI. This makes it possible to receive stable benefits without relying on tax revenue.
4.2 Credit cycle mechanism
The UBI that was paid circulated into the economy through public consumption and investment, and returned to government banks and funds. This cycle makes it possible for the currency to operate a sustainable system without lingering in society as a whole.
4.3 Mathematical model (outline)
- Credit balance:
L_\text{top} = L_\text{bottom}
- Currency supply:
M = L_\text{top} + L_\text{bottom} - R
- UBI benefit adjustment:
B = B_0 + \alpha(\pi^* - \pi) + \beta \frac{Y - Y^}{Y^}
• B: Benefit amount
• \Pi: Real inflation rate
• Y: Real GDP
• \Alpha, \beta: adjustment coefficient
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- Implementation method
• Automatic benefits based on stablecoin investment profits
• Transparency and automation of UBI distribution through smart contracts
• Credit creation support through the decentralized finance (DeFi) platform
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- Macroeconomic effect
• Automatic stabilization of the economy
• Narrowing the income gap
• Relief of deflationary pressure
• Improving the autonomy of economic entities
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- Risks and challenges
• Management of inflation and overcredit
• Suppression of moral hazard
• Consistency with international finance
• Measures to respond to fluctuations in operating profits
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- Conclusion
The UBI model based on stablecoin investment income secured by central bank bonds makes it possible to realize theoretically sustainable benefits for all without relying on tax revenue. By adopting an equal financial structure, it will be the basis for a new national financial model that balances the credit authority of the government and the people and optimizes the economic cycle.
