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Cloud Woculand

Published in Automated Trader Magazine Issue 18 Q3 2010

Peek ahead

We're very embarrassed about this. Everybody in the Peek Ahead office - okay, the Peek Ahead cupboard - feels dreadful. We apologise unreservedly for this failure - only one failure, mind - of our press clipping service early warning system to keep ahead of significant world events. The fact is - you see - it's like this. Those of us responsible for knowing what has been, what is and what will be - well, we're usually very good at [Get on with it - Ed.] - that is, we're almost always [Now would be a good time - Ed.]

We've never heard of the Wocu.

We missed its launch last November, and when the news came in recently that the Wocu was trading on the Polski Rynek Terminowy Spolka Akcyjnait (PRT - Polish Futures Market, in Warsaw; we knew that), we launched an immediate damage-limitation exercise. Junior staff were dispatched to the coffee machine on the main editorial floor, to talk airily about their favourite Wocu-denominated instruments (and not to stop until they were sure they had been overheard), while the senior team fired up the Column-Generating Algorithm. We've been working on a jargon-based overlay to our best-performing model, AcroNymEnHancerTM, and maybe if we gave it a microsecond to warm up …

The Wocu is a creature of air and fire that haunts the remote northern Canadian forests, especially in deepest Winter. Never seen, known only through myth and legend, the Wocu is said to have a cry that can freeze the hearts of lonely hunters as they huddle around their camp fires late at night counting and re-counting their last few dry twigs.

When you're running it live, it works best if you remember to adjust the plausibility setting.

The Wocu is the World Currency Unit (a very, very, very small prize for working out how they came up with the name). It has been developed as a derived world currency unit to allow corporations, financial institutions, governments and even individuals to trade across national boundaries and hold foreign assets with minimal risk of losses caused by exchange rate fluctuations - and if something about this sentence tips you off that we've had the sense to get hold of the backgrounder, feel free to join us at www.wocu.com.

Maddeningly, the Wocu is based on the world's top twenty currencies as measured by GDP, and it is re-weighted every six months. This makes it even more stable than the IMF (International Monetary Fund)'s SDR (Special Drawing Right, actually), which is saying something. The SDR is a four-currency mash-up that only gets re-weighted every five years. British politician Howard Flight, who once co-wrote a book called All You Need to Know About Exchange Rates (with Bonita Lee-Swan in 1988, Sidgwick & Jackson), and who is, curiously enough, a one-time associate of this column's lead writer, describes the launch of the Wocu as "an important moment for the history of currency".

Yeah. Nerds of a certain age with sad private lives will no doubt be reminded of the casual reference to 'adjusted dollars' in the film Aliens. It is a lonely experience, to be the only person at the bar afterwards wanting to talk about how they adjusted the dollars. Yes, the special effects, were great, no, I wouldn't have gone back in there, even with a flamethrower that big (and light enough to carry), but what kind of inflationary mayhem do you imagine led to adjusted dollars? Was it a devaluation? Weimar-style hyperinflation? Guys? Where are you going? It's my round.

Perhaps you don't know the feeling. Perhaps 'no doubt' is a touch optimistic. Perhaps there aren't many nerds of a certain age with private lives that - anyway.

The point is, currencies are at once fascinating things and products of volatility. They have romantic, or at least distinctive, names: renminbi, shekel, dirham, dinar. Like languages, they represent great swathes of history (or fantasy - how many adjusted dollars would it take to buy up the world's stock of important books translated into Klingon*?). They come into being because civilisations rise and fall. Because camel trains passed through Samarkand, and all that. They evolved in souks and bazaars, and all that too. Myth. Legend. A brisk trade in spices and not enough suitcases to carry the proceeds. Solution: currency.

And now an entity called The WDX Organisation (which apparently "has also formed and sponsored The WDX Institute") has put together a synthetic currency unit designed to take exchange-rate movement out of international trade. This thing is designed to remove volatility.

You wouldn't catch Genghis Khan buying his morning latte with Wocus.

It's time somebody invented a truly volatile currency: something with a little history to it, but not too much; something with international credibility but a touch of uncertainty about its future. A currency good for physical trade that you could also trade on its own merits.

Tell you what. Let's call it - the dollar.

*Try www.kli.org.