SDR basket of currencies and reserve ratio in the Sögur currency model
INTRODUCE
The currency model plays a very important role in building trust and stimulating growth through Sögur’s smart contract. So what is the basket of currencies and the reserve ratio in this model?
Sögur was created with the main purpose of bringing a common currency to the world, removing barriers on currency differences between countries. Makes currency exchange easier. Therefore, Sogur’s monetary model must be complete, arranged and properly evaluated in order to bring confidence and help Sögur and its common currency grow. To understand better, let’s take a look at the SDR basket of currencies and the reserve ratio in the Sogur currency model.
The purpose of the Sögur currency model
The purpose of Sögur’s monetary model is to ensure that the SGR becomes a fully independent, official currency. To achieve this, there must be a sufficient degree of stability in the SGR value; No one will accept SGR as a means of payment if its value fluctuates excessively. On the other hand, there is an inherent tension between this goal and another monetary function: the store of value. In general, a good value warehouse is likely to be appreciated. It is also appropriate that value should change to reflect the strength and usefulness of money.
Basket of currencies in the Sögur currency model
Diversification is one of the most powerful financial tools for hedging and controlling volatility.
The SDR is a basket of currencies that are the most prominent globally. It is updated every five years to reflect the relative importance of money in the world’s trading and financial systems. Its current composition includes USD (41.73%), EUR (30.93%), RMB (10.92%), JPY (8.33%) and GBP (8.09%). Knowing the currencies of different currencies in the basket of currencies will be more beneficial to you when you know the value of money.
The reserve ratio in the Sögur currency model
The reserve ratio is defined as the ratio of the market value of SGR supported by Sogur’s reserves. It represents 5 levels of confidence that the market places in the SGR coin, 5 levels independent of the backing reserve.
Reserve ratios are designed to support market growth and SGR prices. When the economy is small, Smart Contracts adopt a high percentage of reserves, supporting stability. As the economy develops along with an increase in market confidence in SGR tokens, the percentage of reserves decreases, leading to an increase in SGR price. If Sögur’s economy shrinks, the contract automatically increases the reserve ratio. Since this is encoded in the protocol, the reserve always allows all SGRs to be exchanged using a smart contract at a price determined by the currency model.
The reserve ratio also represents the extent to which the Sögur smart contract can influence the SGR price. When the reserve ratio is high, Sögur’s liquidity function has immense power in minimizing price volatility. When the reserve ratio is lower, the value of the SGR to a greater extent is obtained from and therefore exposed to market confidence; Reserves play a smaller role in stabilizing price movements.
Stock Sögur always maintains the solvents by design, even when the reserve ratio is less than 100%. When someone sells SGR tokens back to the smart contract, the money that has been deposited into the reserve when the last token is released, is withdrawn to be refunded to the seller. As more tokens are resold, Sögur’s smart contract bid decreases in a similar way to how it initially rose as the economy grew.
The Sögur currency model always brings clarity about the components related to the value of money, providing necessary information, analyzing carefully to bring confidence and development of the common currency that they create.
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