Synthetic money

This paper provides a methodology for constructing synthetic money, which is defined as an optimal currency basket that mimics a single currency. Empirical evidence is provided by constructing a synthetic dollar from a currency basket comprised of six currencies that excludes the U.S. dollar. We believe that synthetic money has a number of practical applications, including currency pegging operations by nations, denomination of global bond issues by large firms and countries, and analyses of currency movements over time by interested parties.