A basket currency refers to a currency whose value is determined by comparing and in some cases averaging the values of a group of other assets such as other currencies, commodities, services, or any combination thereof.
An example of a basket currency from the 1970s is the Exeter Constant that Ralph Borsodi created in response to the energy crisis, based on a basket of commodities similar to the basis of the UK Consumer Price Index. A printed ‘Constant’ was distributed with the guarantee that it would always be redeemable for fixed amounts of designated commodities. During the three years of its experimental use, the Constant retained its buying power while the inflating US dollar lost 15 per cent in purchasing power. 1
- Nef, (2013), Energising Money, available at http://www.neweconomics.org/publications/entry/energising-money ↩