Dividing the economic activity estimate in the event of successful market adoption (5-20 trillion dollars) by the velocity estimate (2-12) results in a total value of between half a trillion to 10 trillion dollars.

Q monetary policy

Every currency needs a sound monetary policy, in order to maintain public trust in its long term stability. A currency whose economic value fluctuates rapidly complicates trades and finance, damages the economy, and eventually pushes people to use other currencies.

To maintain purchasing-power stability, the total amount of money in the economy (the “money supply”) should grow on pace with economic activity and the corresponding demand to hold money. In most countries money supply is primarily controlled indirectly, through incentives given by central banks to private banks.

Initiative Q also needs a monetary policy to maintain the currency’s stability, but as a global electronic currency, it is not bound by these historical limitations, and can use more advanced monetary instruments while relying on accurate real time economic data. These monetary instruments are detailed below.

It should be noted that Initiative Q’s monetary policy will eventually be overseen by a monetary committee that is directly accountable to all Q holders, and independent of the Initiative Q corporate entity.

Controlling the Q in circulation

The Q payment network’s purpose is to facilitate trade more efficiently than current payment systems and currencies. This requires that the Q be stable in value, so prices remain fairly constant and predictable.3

To accomplish this goal, the reward Qs reserved for each member will be released for use gradually, at a rate that matches the growth in economic activity on the network, while maintaining a target exchange rate of one US dollar per Q.

Monetary instruments

Q’s main monetary instruments:

Releasing Qs — Members who join Initiative Q can reserve Qs for free, with the specific number varying based on how early they join. These Qs will be released gradually as economic activity grows, enabling their use on the Q network and thus increasing the active current money supply.

Activity incentives — Additional Qs can be issued to incentivize activities that promote network growth, such as a cashback reward on purchases, a bonus on conversion from other currencies, etc. This effectively creates a discount on Q-based purchases, which in turn attracts economic activity, which then requires issuing more Qs and so on. This positive feedback loop could fuel rapid growth of the network until it becomes a payment standard and can grow solely on the merit of its technological advantages.

Open market operations — The committee can increase or decrease the amount of Qs in circulation by directly buying or selling Qs in return for other currencies. The committee can also sell future grants of Qs, at a discounted rate, to accredited investors. These Qs will then be released as economic activity grows, similar to the Qs reserved for new members.

In general, these monetary instruments offer much better and more direct control of the money supply than those used by today’s central banks. Central banks are bound by the historical limitations of the fractional reserve system — a system that requires them to operate through private banks. This results in long response cycles and unpredictable inflation.

Money supply

The money supply must match economic activity to keep purchasing power stable. Therefore, since economic activity has no cap, the amount of Qs should also be uncapped.

However, it is extremely important that the money supply only grows in proportion to the growth in the demand to hold Qs, and not for other reasons. For example, governments that printed money with abandon to fund their budgets (and in doing so transferred wealth from the citizens to government accounts by devaluing the citizens’ currency) created hyperinflation, and eventually made their currency worthless.
Thus, while theoretically unlimited, the Q supply is controlled in practice. This is done solely through monetary instruments that may be used only for the goals of maintaining currency stability, and promoting adoption.
To accomplish this goal, the reward Qs reserved for each member will be released for use gradually, at a rate that matches the growth in economic activity on the network, while maintaining a target exchange rate of one US dollar per Q.

Monetary committee

Achieving currency stability requires careful analysis and prediction of economic activity, as well as consideration of mass psychology factors. This is, unfortunately, still beyond the reach of computers, and requires the involvement of human professionals. This is how government currencies are managed, with major currencies today demonstrating far better long-term stability than that of Bitcoin and other cryptocurrencies. However, Initiative Q could surpass this with more focused and better-incentivized management.

To meet this need, Initiative Q will feature a monetary committee that is independent of the Initiative Q corporate entity, to be appointed via voting by all stakeholders in the Q payment network. This committee will be in charge of setting and running the monetary policy: determining how many Qs to add or remove from circulation, and through which monetary instruments. Members of the monetary committee are financially incentivized to meet their goals by tying remuneration to performance.4
However, it is extremely important that the money supply only grows in proportion to the growth in the demand to hold Qs, and not for other reasons. For example, governments that printed money with abandon to fund their budgets (and in doing so transferred wealth from the citizens to government accounts by devaluing the citizens’ currency) created hyperinflation, and eventually made their currency worthless.
Thus, while theoretically unlimited, the Q supply is controlled in practice. This is done solely through monetary instruments that may be used only for the goals of maintaining currency stability, and promoting adoption.
To accomplish this goal, the reward Qs reserved for each member will be released for use gradually, at a rate that matches the growth in economic activity on the network, while maintaining a target exchange rate of one US dollar per Q.