How is the monetary unit verified?
It is not enough for someone to issue a currency and simply proclaim that it will represent a whole unit of purchasing power over time. The task is far more difficult than that. What is necessary is to secure the issuance of the currency with assets, which on a present value basis will equal the indexed value of the currency issued and outstanding. The indexed value simply measures the ratio of the government-issued nominal currency to the private currency unit, using an inflation index. Hence, the indexed value should tell us what the private currency should be worth in units of the government-issued currency. (As an example, if 15% inflation has occurred since the base-line-date of the private currency; then 1.00 MR$ must equal the purchasing power of $1.15. Hence, the indexed value of the MR$ is said to be $1.15 on that date.) The monetary unit of the private currency is then verified by an audit to determine whether the present value assets actually match the indexed value of the p
