Friday, June 13, 2014

An Udate on Klickex Recent News - An Asset Backed Virtual Currency Coming?

Earlier this year we ran an article on a company called Klickex which is based in New Zealand. They are working on some cutting edge, innovative technology. What caught our attention was a new product they presented last fall. An asset backed virtual currency known as the GSD (Global Stability Dollar).


We were fortunate to get an update on Klickex that we think readers around the world will find interesting. We approached Klickex, who confirmed this information was correct, but had not been released intentionally; so we have somewhat of a scoop in that regard. 


Last month (May 2014) Robert Bell of Klickex made a presentation at a conference held by the Central Bank of Malaysia. Here is the power point presentation he gave at the conference which is posted on the Central Bank of Malaysia web site. It provides an update on the projects currently in progress at Klickex. 

The presentation contains a lot of information that readers will find interesting, even though it is a summary without the detailed text. We will call attention to what we think are some key points in the presentation. 

from page 5 of the Klickex presentation linked above:

Working alongside KlickEx to insure rapid uptake: 
• SWIFT, The UN Capital Development Program, World Bank and the IMF 

Klickex believes their payment systems are attractive to these global institutions because they meet all regulatory compliance concerns, are lower cost alternatives to competitors, and offer unique capabilities like real time foreign currency exchange for money transfers at low cost to the user. Their system also allows the "unbanked" to gain access to financial resources which is an important goal for these institutions. 

Klickex Chairman Robert Bell offered us his thoughts on what reaching out to the unbanked means. He defines the "unbanked" as 'anyone who finds the financial system too expensive or too difficult, at present'. Not just the poor - but the disenfrancised rich, too. "In our world - 'Disenfranchised rich' means anyone who earns over about $10,000 USD - yet says 'no' to a financial relationship of some sort."

Mr Bell added these thoughts: 

"Banking the 'unbanked' is not about bringing more people into the existing system - it's evolving current practices to become more attractive across the spectrum, from regulators to consumers; but particularly to those who need our support the mostIt's about stability and confidence - and that is the role we (KlickEx) see as our most important task ahead, and also the core responsibilities of regulators world wide."


from page 7 of the Klickex presentation:
Let's look at one their key products

GSD Super-Sovereign (risk free) Asset
Regional, Cleared Fund, self balancing, asset backed store of value, unit of account. 
The “Global Stability Dollar” (GSD) is based upon weightings determined by the GSI 
(Global Stability Index) – a basket of distributed assets readily tradable in real time. 


Klickex lists several interesting products that relate to rapid foreign currency exchange, regulatory compliance, and overall security and integrity of individual transactions. The latter are important because global banking institutions have many concerns related to money transfer systems being abused. KlickEappears to be taking its time in getting to markethowever, the presentation implies that once these concerns have been eliminateddevelopments will become rapid. 

The GSD product is highlighted above because it is something very unique to Klickex that has great potential. Being able to support mobile money transfers is one thing. Being able to do low cost real time foreign currency translations is more significant. But developing an asset backed virtual reserve currency that can be utilized by both Central Banks and everyday citizens opens new doors for the future. Right now Central Banks use internal SDR's at the IMF while citizens use their local currency. There is no connection between them.

While we don't yet have the details of how this GSD product might work, we can visualize it being utilized by Central Banks to help improve stability and confidence in areas where the local currency is struggling. 

from page 9 of the Klickex presentation:
Klickex lists a "project in implementation" called East Africa. Here is the explanation of that project

Real time regional multi-currency payments architecture in secondary implementation phase under Central Bank supervision. Replicate Pacific Infrastructure. 

This suggests to us that Klickex is working under actual Central Bank supervision in Africa to implement payment systems there like the one they operate in the South Pacific. We suspect that this work may include adding on the GSD product to the payment system to function as an "asset backed store of value and unit of account." 

In Africa, as we noted in our post just below, there is a 15 nation group known as the South Africa Development Community (SADC). Per this paper on the BIS (Bank of International Settlements) web site (see page 2), the SADC has the following goals:

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"SADC's road to a Monetary union is outlined in the Regional Indicative Strategic Development Plan which is a broad strategic plan for implementing programmes for achieving key milestones that will ensure the realisation of a Monetary Union in SADC. 

These key milestones include as a first step the attainment of a SADC Free Trade Area (FTA) by 2008. This milestone was reached when the Heads of States and Government in SADC launched the FTA in August 2008. 

The next milestone is the launch of Customs Union by 2010, and a common market by 2015 which will be followed by the establishment of a SADC central bank by 2016 and eventually a SADC currency by 2018."

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In this article in the Financial Mail  we learn not only of a plan for a regional central bank and currency, but also a broader goal for the whole African continent of an African Union (AU). Something like the existing European Union (EU).

We can't help but observe how the Klickex GSD might fit very well into this plan. Since we know Klickex is involved in an ongoing project in Africa under Central Bank supervision, it makes sense to us that this new product (the GSD) will eventually be involved.

Klickex is clearly expanding beyond a regional start-up and moving into new territory.

All of this is potentially very ground breaking. We will continue to follow this over time as things develop. But for now, we appreciate Klickex willingness (via the Central Bank of Malaysia presentation) to share their vision with our readers.This should be a very interesting story to follow.

Update 6-14-2014: This article has been very popular and generated good questions. I added this new post to try and answer a few of them.

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