Appendix E - Historical evidence for the separation between unit of account and means of payment

This appendix documents those historical precedents and clarifies how UFD differs structurally from all prior solutions.

The UFD does not emerge from theory alone. It reflects a recurring empirical pattern observed whenever monetary instability destroys the ability of money to function as a unit of account. In such conditions, societies repeatedly recreate a separate measurement layer to restore economic coordination.

Brazil – URV

During the Plano Real, Brazil introduced the URV as a temporary unit of account. Prices, wages, contracts and taxes were denominated in URV, while payments continued to be executed in an inflating currency.

The URV was not money, not a store of value and not a payment system. Its sole function was measurement. Inflation dynamics stabilized before the introduction of a new physical currency, indicating that the core problem was the collapse of the unit of account rather than transactional mechanics.

Chile – Unidad de Fomento

Chile’s Unidad de Fomento remains in use decades later. Real estate prices, long term contracts and financial obligations are denominated in UF, while settlement occurs in the local currency.

This represents a persistent institutional separation between measuring value and transferring value, created to compensate for monetary instability.

Central and Eastern Europe

In countries such as Poland, Hungary and Romania, periods of high inflation led to widespread informal dollarization of the unit of account. Durable goods, real estate and contractual negotiations were commonly denominated in foreign currencies, even when final settlement occurred in domestic money.

In Yugoslavia, hyperinflation rendered local prices meaningless. Merchants continuously updated prices using external references, turning the domestic currency into a short lived settlement instrument rather than a measure of value.

Germany – Weimar Republic

During the Weimar hyperinflation, prices were increasingly expressed in gold equivalents or stable reference units. Economic actors abandoned the official unit of account before formal monetary reform. Stabilization only followed the introduction of a reference with explicit issuance constraints.

Common empirical pattern

Across all cases, the same structure appears:

• The local currency continues to circulate

• Its role as a unit of account collapses

• A parallel reference unit emerges

• That unit restores comparability and coordination

These arrangements successfully restore short term order, but they share a structural limitation. Their reference units depend on indexation formulas, foreign issuers or political guarantees. The underlying scale remains adjustable.

Structural distinction of UFD

UFD belongs to this historical lineage but resolves its core limitation.

• It is not an index

• Not a peg

• Not a transitional arrangement

• Not dependent on any issuer

UFD fixes the denominator of price measurement.

Prices are defined using a denominator that is fixed by construction and cannot be altered. This transforms the separation between unit of account and means of payment from a defensive workaround into a stable monetary architecture.

UFD redefines price measurement by fixing the denominator of the unit of account while leaving payment systems unchanged.

Historical experience shows that societies instinctively recreate a separate unit of account when monetary measurement fails. UFD does not invent this behavior. It completes it by using a reference whose denominator cannot be manipulated.