How the weights are calculated in the GLX currency basket

GLX is the tokenized representation of the GRCI (Global Reserve Currency Index), a currency basket unit that tracks the 15 largest global currencies and gold, following an intuitive and unbiased approach that evolves as the world economy evolves.

This basket of fiat currencies was originally created by OptimInvest, founded by Hélie d’Hautefort, both for entities with global assets and for individuals wishing to protect their purchasing power. Until now, this basket was only accessible to a few large institutions due to the structure of the foreign exchange market.

In the GLX, the weights are calculated based on Gross Domestic Product (GDP) for each country, and adjusted by Purchasing Power Parity (PPP). The portfolio of the basket aims to capitalize on the market trend towards a globalized and multipolar world by leveraging smart algorithms using the GDP / PPP formula.

The currency allocation is well diversified and covers 85% of the world economy. The PPP element ensures a higher weighting to emerging market currencies (In contrast to the International Monetary Fund’s special drawing rights (SDR), the nearest approximation to a “global currency”, which consists mainly of a basket of developed world currencies).

Calculation of currency weights inside the basket

• The currencies included in GLX are determined by reference to the GDP based on the PPP level valuation for a country, as published by the IMF in The World Economic Outlook Database.
• The weight of a currency inside GLX increases or decreases with that currency’s role in the global economy. The GLOBCOIN Advisory Committee validates the monthly weighting calculations, and the positions to be adopted at the following “Weighting Date”.
• GLOBCOIN will use a protective mechanism to avoid the negatives effects of a currency that is breaching certain liquidity constraints and also to exclude a certain country if needed. This will also be determined on a monthly basis by the GLOBCOIN Advisory Committee.
• The Index tracks the performance of currency pairs where each position consists of a long position in a currency against a short position in USD. The Index also includes forward positions in gold.
• The currency allocation in GLX is disciplined and systematic according to a very comprehensive Rulebook. We know that the past is not necessarily a guide to the future, but it is interesting to assess the basket’s historical performance.

Highlishts of the GLX currency basket:

• It covers the vast majority of global production
• It naturally adjusts over time to the econometrics of each constituent country.
• It is well-diversified amongst G10 currencies, emerging currencies and gold.
• The value of GLX is stable and diversified across various currencies and risks less to lose value if the USD loses value.
• The GLOBCOIN team is composed of public profiles with a long experience in designing baskets of fiat currencies. In addition, the linked funds will be regularly audited by a accounting firm.

So far, this index has been adopted by several institutions and wealthy family offices because it was costly doing it themselves. Thanks to the creation of the GLX stable token (or stablecoin), the basket can be democratized now, easily and with modest transaction costs.

Small glossary

• Index: a small sample of the overall market.
• Gross Domestic Product : value of goods and services produced in a country.
• Purchasing Power Parity: economic theory that compares the price of the same basket of goods in different countries.
• Position (finance): amount of a security, commodity or currency owned or held by an individual or institution. They can be short (borrowed and then sold) or long (owned and then sold).

More information about the GLX: globcoin.io