Answer the following:

1. What is UMU?
The DCMA states that the Universal Monetary Unit (UMU) aims to provide a legally recognized
money commodity that can be exchanged for any legal tender settlement currency. The UMU,
represented by the ANSI character Ü, functions similarly to a central bank digital currency (CBDC),
enforcing banking regulations and ensuring the financial integrity of the international banking
system. It also allows banks to securely link SWIFT Codes and accounts to a digital wallet, allowing
for real-time cross-border payments.

The Staked Proof of Trust (SPOT) Protocol, a multi-dimensional Distributed Ledger Technology
(mDLT), and an Artificial Intelligence (AI)-powered central banking monetary policy framework are
used by the UMU. The Digital Currency Monetary Authority (DCMA) dubbed the UMU "Crypto
2.0," underlining its potential for widespread use in the global economy.

2. How it is to be done or administered?

The financial system and central banks must support UMU to succeed—something it does not yet
have. On the retail front, UMU will have to compete with Ripple and stablecoins. Both allow
international transactions to occur at a fraction of the speed of traditional bank transfers.

The DCMA has also written legislation for their CBDC. They worked with central banks from
advanced economies and emerging markets to establish their proposed Universal Monetary Unit
Model Law. The legislation includes UMU/Unicoin as a supplemental money commodity that serves
as a store of value, intending to mitigate the local currency's possible devaluation. Furthermore,
UMU/Unicoin would be a payment currency during settlement transactions.

3. What are the advantages?

- UMU's wallet has premium exchange rates and can convert any settlement currency amount to
equal UMU value.
- According to the DCMA, UMU/Unicoin is intended for central banks to establish retail CBDCs
(for use by the general public) and wholesale CBDCs (for use by financial institutions). It also
claims to solve a problem: the lengthy, inefficient, and complicated process of international bank
transfers.
- Banks can link UMU digital currency wallets with SWIFT codes and bank accounts to process
cross-border payments across digital currency networks as SWIFT does. This will be done at
wholesale foreign exchange rates, with real-time settlements. In comparison, international bank
transactions might take days under the existing methodology.
- Unicoin will help mitigate risk against local currency depreciation and function as a payment
currency at the time of settlement.

4. What are the disadvantages?

- IMF did not create UMU, instead it was DCMA. However, there are little information about this
private organization, which make UMU sketchy.
- UMU centralization and lack of innovation may hinder its adaption. It might not be able to
compete with decentralized cryptocurrencies like Bitcoin, which offers more freedom and
privacy to users.

5. What is the implication of this?

- According to Hubbard, UMU changes the way cross-border payments are made and protects
against seasonal and systemic local currency devaluation.
 - Cross-border payments can be time-consuming, costly, and hazardous. In today's payments
environment, counterparties in various countries rely on costly trusted relationships to
compensate for the absence of a joint settlement asset and standard rules and governance. Having
the possibility of a multilateral platform, such as UMU, that may improve cross-border payments
while also altering foreign exchange transactions, risk sharing, and, more broadly, financial
contracting.

6. What impact it can have for dollar?