Rejected alternatives | Why the Ecosystem

Before choosing the 100% Whole Reserve™ model, the members tested the three alternatives already on offer. This page states the tests, the record and the finding.

The three alternatives

Three alternatives to the fractional reserve model have been offered to the financial system since the first cryptocurrency was issued in January 2009.

Cryptocurrency: A cryptocurrency is a unit with no asset behind it, and no intrinsic value within it. The cryptocurrency's value is a price, set by trading against a national currency and sustained only by continued buying. A cryptocurrency circulates on a ledger that anyone may join, on which a private key is the only proof of ownership and there is no issuer of record.
Stablecoin: A stablecoin is a private company's promise to pay a national currency, issued outside the banking system. The stablecoin inherits the erosion of the nation's currency it promises, and adds two risks of its own: that the issuer cannot pay, and that the reserve the issuer holds is itself lost. A stablecoin has no intrinsic value within the token itself.
Narrow bank: A narrow bank takes deposits and places all of them at the central bank. The narrow bank removes the risk of lending, and with it the financial institution's ability to lend at all.

The three tests

The Bank for International Settlements states three tests that a monetary arrangement must meet, in Chapter III of its Annual Economic Report 2025, The next-generation monetary and financial system, published 24 June 2025.

Singleness: Whether the money in which a financial institution settles is one money, worth the same in every hand and on every day.
Elasticity: Whether the supply of that money can expand to meet what settlement requires.
Integrity: Whether every holder of that money is known and every movement of it is lawful.

The report found that stablecoins fall short of the requirements to be the mainstay of the monetary system on all three tests, while finding the technology of recording ownership on a ledger a transformative innovation in itself. Alkaimi Ecosystem™ member financial institutions applied the same three tests to each alternative and to the record of what happened when each was tried.

The record and the findings

Cryptocurrencies

The test: Cryptocurrencies fail all three tests. A cryptocurrency's value is not one value: it is a price that moves every minute. Cryptocurrency supply cannot expand to meet settlement, because the supply is set by the protocol's own formula and not by what settlement requires. Cryptocurrency operators stand outside the regime to which a chartered financial institution answers.
The record: On 12 June 2022 the cryptocurrency lender Celsius Network, holding more than 11 billion dollars of its clients' assets, froze all withdrawals and transfers, and filed for bankruptcy in July 2022 with more than 100,000 creditors. In November 2022 the exchange FTX, valued at 32 billion dollars at the start of that year, saw its clients withdraw about 6 billion dollars in 72 hours and filed for bankruptcy on 11 November 2022 with its clients' assets missing. The record of the cryptocurrency regime is one of frozen withdrawals and failed venues.
The finding: Alkaimi Ecosystem member financial institutions rejected cryptocurrencies on all three tests.

Stablecoins

The test: A stablecoin is a promise, and a promise fails the first test the day the promise is doubted. A stablecoin that holds its reserve at a fractional reserve financial institution carries that financial institution's promise inside its own; a stablecoin that holds no reserve carries nothing.
The record: On 7 May 2022 the stablecoin TerraUSD, which held no reserve of the currency it promised and kept its value by a formula, began to lose its peg to the dollar, and within five days about 40 billion dollars of value across TerraUSD and its companion token had been destroyed. On 11 March 2023 the stablecoin USD Coin, which did hold a reserve, fell to 87 cents on the dollar after its issuer disclosed that 3.3 billion dollars of its roughly 40 billion dollar reserve was held at Silicon Valley Bank, which regulators had closed on 10 March 2023; the coin returned to a dollar only after the United States Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation announced on 12 March 2023 that every depositor of that financial institution would be made whole.
The finding: Alkaimi Ecosystem member financial institutions rejected stablecoins because a stablecoin is a promise and the record shows the promise breaking. A member financial institution that accepted a stablecoin into its settlement would be accepting a private promise in place of the nation's currency.

The narrow bank

The test: The narrow bank fails the second test. A financial institution that holds every deposit at the central bank can lend nothing, so the supply of money it can put to settlement cannot expand.
The record: In the United States a financial institution chartered in 2017 to take deposits and hold them entirely at the central bank, The Narrow Bank, applied for a central bank account; in December 2023 the Federal Reserve Bank of New York refused the account, on the ground that the financial institution's model would pose undue risk to the stability of the financial system and to the implementation of monetary policy.
The finding: Alkaimi Ecosystem member financial institutions rejected the narrow bank on the second test, and a central bank refused it an account on grounds of its own.

Alkaimi Ecosystem member financial institutions concluded that none of the three alternatives gave a chartered financial institution a settlement instrument its regulator would accept as final, and none gave it a source of money to lend that did not itself rest on a promise. Each of the three adds instability to the financial system rather than removing it.

What the Alkaimi Ecosystem does instead

The 100% Whole Reserve model kept the three things in the first generation of digital instruments that worked and rejected the rest.

Movement without an intermediary: A value unit can move from one account to another without an intermediary on the route.
Finality on record: The value unit movement is final the instant it is recorded.
Settlement on conditions: Settlement can execute on stated conditions.

The Alkaimi Ecosystem's ledger carries all three, and it is one controlled ledger, held in custody and centrally administered, on which issuance occurs only through Alkaimi Ecosystem member financial institutions and every holder is known at every instant. No distributed ledger and no blockchain is used.

What moves on the Alkaimi Ecosystem's ledger is the Digitized Tangible Asset™ (DTA™). Each DTA holds the whole recognized value of an identified physical asset, held under its owner's title, and each DTA is underwritten at issuance, so that in the event of a default on the asset the holder of the DTA is the party the underwriter pays. The DTA is not traded on any venue, is not designed to rise in price and pays no yield, so there is no price on which to speculate.

The DTA is not a currency. Alkaimi Ecosystem member financial institutions all agree that currency is a nation's sovereign issue: only a nation's treasury, or its central bank acting for the nation, should issue what circulates as currency.

On the narrow bank, the position of an Alkaimi Ecosystem member financial institution differs by construction. A member financial institution is an operating, chartered financial institution with its own central bank account. The whole reserve it holds is its clients' value on the Alkaimi Ecosystem's ledger, not deposits placed at a central bank. A member financial institution keeps its ordinary banking operations and grants credit, so no central bank is asked to carry a member financial institution's reserve.

Point examined	The first generation of digital instruments	The Digitized Tangible Asset
What gives it value	A price set by trading; depends on continued buying	The whole recognized value of a physical asset, recognized once
How ownership is recorded	An open distributed ledger; a private key is the only proof	One controlled ledger held in custody; every holder known
Who operates it	Operators outside the banking system	Regionally chartered Alkaimi Ecosystem member financial institutions under their own regulators
What stands behind a default	Nothing at issuance	Underwriting at issuance; the holder is the party paid
Whether there is one standard	Thousands of tokens, each on its own terms	One format, one regulated issuance process
Whether there is an asset	No asset, or a claim on a currency	A physical asset under its owner's title
Whether it is traded	The price is the product	Not traded, not designed to rise in price, no yield

Table 2. Seven points on which Alkaimi Ecosystem member financial institutions examined the first generation of digital instruments against the Digitized Tangible Asset.

Why the choice serves the Alkaimi Ecosystem member financial institution over the long term

An Alkaimi Ecosystem member financial institution settles in an instrument its regulator can read as final, inside the banking system to which it already belongs, with no private currency in its settlement and no speculative price on its books.

The three tests are met by construction.

Singleness: The value of a DTA is one value, recognized once, worth the same in every account and on every day.
Elasticity: The supply of value on the Alkaimi Ecosystem's ledger expands by recognizing more assets onto the ledger, never by lending the same asset more than once, so the supply grows with substance and not with promises.
Integrity: Every holder, every issuance and every movement is known to a centrally administered ledger that the member financial institution's regulator can examine.

As the Alkaimi Ecosystem's ledger expands, the member financial institution's settlement business moves further from instruments that fail those tests, and its standing with its regulator rests on the construction of the ledger rather than on any assurance. Alkaimi Ecosystem member financial institutions found that the alternatives on offer either left the promise in place or removed the ability to lend, and that the 100% Whole Reserve model removes the promise and keeps the lending. The finding is why each member rejected the alternatives and chose the ecosystem.

Sources

Bank for International Settlements, Annual Economic Report 2025, Chapter III, The next-generation monetary and financial system, 24 June 2025. Federal Reserve Bank of New York, decision on the master account application of TNB USA Inc., December 2023; Federal Reserve Board, advance notice of proposed rulemaking on narrow banks, 6 March 2019. Celsius Network, pause of withdrawals, 12 June 2022, and Chapter 11 filing, July 2022, United States Bankruptcy Court, Southern District of New York. FTX Trading Ltd., Chapter 11 filing, 11 November 2022, United States Bankruptcy Court, District of Delaware. TerraUSD, loss of peg from 7 May 2022. Circle Internet Financial, statement of 11 March 2023 on reserves held at Silicon Valley Bank; joint statement of the Treasury, the Federal Reserve and the FDIC, 12 March 2023. The Alkaimi Financial Ecosystem™ in Function, Granular Value on a Neutral Rail, Pegisai Global Holdings, Inc., released 22 August 2026, published on pegisai.com 5 September 2026, sections 10.15 and 11.2.

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