Some notes on price stabilization indexing

This is just a quick update on a topic that I think is interesting to just
a few on this list.

In preparation for the March meeting in Paris I'll be writing some use-case
examples, scenarios in which algorithmic pricing with a vendor's chosen
index would be preferred.  Please contact me if you would like to
collaborate this topic.

The function use of price indices in web-payments can be summed up as
follows:

"Using any standards-compliant e-commerce software, a vendor would select a
reference currency they prefer to use for base price management, and
identify any other currencies they would be equally willing to accepted in
payment. They can also select one of the available price indexing services,
which could be a currency exchange rate, or another type of index more
relevant to the scope and dynamics of their particular business that would
enable greater price stability, variability with key input prices, or some
other criterion.

When a vendor selects a given index service, their e-commerce software
would automatically query its data feed in order to interpret their base
price for each good or service from its publication date, to express the
same real value in each of the other currencies that the vendor has
identified as acceptable for payment. Price re-calibrations occur on an
established schedule through time, and each update is digitally signed by
the vendor's e-commerce software.

A customer browsing the vendor's e-commerce site chooses a payment currency
that s/he has available to pay, from amongst those identified as acceptable
to the vendor. (This would be like choosing a mutually acceptable language
on a multilingual website). The vendor's site then displays all prices in
that currency to the purchaser.

When the customer activates a purchase, the vendor's shopping cart function
sends the digitally-signed interpreted price expressed in the buyer's
chosen currency to the purchaser's own payments processor, local or
external. Once the purchaser's available funds are confirmed, the
transaction is processed at both ends.

***

Some indices being worked on as time permits:

A useful ready-to-go index for any global retail vendor to consider would
be the "World Price Index":
http://www.worldeconomics.com/WorldPriceIndex/WPI.efp
Recently I made arrangements with EF Publishing for direct server queries
to their WPI for the W3C WebPayments work.

With the founder of http://www.centralbanking.com/ I've been discussing the
utility and design of an index based on total market capitalization, which
can be constructed from data at this source:
http://www.world-exchanges.org/statistics/monthly-query-tool
Precise methodology for the index is not yet worked out.

The Earth Reserve Index that I and some colleagues are working on (the
details of which are admittedly tangential to this list) received some
useful off-list feedback during the past week. I've posted an edited update
to the Earth Reserve Index concept-of-operations 2-pager here:
http://www.projectmanagementhotel.com/attachments/6030/ERindex_2page_19dec2013aPDF.pdf
http://www.projectmanagementhotel.com/documents/449


Joseph Potvin
Operations Manager | Gestionnaire des opérations
The Opman Company | La compagnie Opman
http://www.projectmanagementhotel.com/projects/opman-portfolio
jpotvin@opman.ca
Mobile: 819-593-5983
LinkedIn (Google short URL): http://goo.gl/Ssp56



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