Australia
Australia is a monetary sovereign (RBA issues the AUD), a standard unilateral calibration. It is the mirror image of Japan on returns: both the production-function path and the historical path point to an ABOVE-average return, and they agree.
Status: macro block primary-sourced (RBA, ABS, ASX, IMF).
1. Macro parameters
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M3 | A$3,449 bn (A$3.45 T) | Apr 2026 | Reserve Bank of Australia |
| Transaction-active M1 | A$1,990 bn (A$1.99 T) | Apr 2026 | RBA (currency + bank current deposits) |
| M^T / M3 ratio | ≈ 57.7% | - | constructed (see §2) |
| Nominal GDP | ≈ A$2.7 T | 2025 | ABS (~US$1.8T) |
| Real trend growth g | ≈ 2.1% | 2025-26 | RBA (near potential; higher than most of the set) |
| Population | 27.4 M | 2025 | ABS |
| Equity market cap (ASX) | ≈ A$3.3 T ≈ 122% of GDP | 2025 | ASX |
| Government debt | ≈ 35-40% of GDP | 2025 | Australian Treasury (AAA-rated, all three agencies) |
2. Transaction-active share (M^T / M3)
RBA's M1 is currency plus bank current (transaction) deposits, the transaction-active measure. M3 = M1 + all other deposits at ADIs (the RBA's broad aggregate; "Broad Money" is a near-identical A$3,350bn).
M^T (Australia) = M1 = A$1,990 bn
M3 = A$3,449 bn
M^T / M3 = 57.7%
Sits between the US (51%) and the UK/Canada (62-70%). Sensible and sourced.
3. Realizable return: both paths point high (and agree)
Path 1: Production function
Australia's labour share is at a record low (~0.56 on a total-factor-income basis; ABS), a resource-heavy economy with a high capital share → alpha_AU ≈ 0.44. Mechanically:
r0(AU) = 0.44/3.0 - 0.05 = 9.67% -> ~6.17% realizable (Mode B)
Path 2: Historical realised returns
Australia has one of the HIGHEST long-run real equity returns in the DMS database: ~6.4% real (1900-2024), reflecting sustained resource booms and the avoidance of the wartime capital destruction that hit Europe and Japan.
Resolution: confident above-average central
Unlike Japan (where the paths diverge and the historical anchor pulls the estimate DOWN), here both paths point to an above-average return and broadly agree. The central realizable is set at 5.4% (Mode B), band 4.1-6.3%, comfortably below the levered listed-equity ~6.4%, the same broad-below-equity ordering as the US/UK/Canada, just at a higher level. Australia is the highest-return calibration in the set, and both independent methods support that.
4. Engine values
Currency A$. M^T share 57.7%. Defaults: M3 A$3,449bn, GDP A$2,700bn, pop 27.4M, market cap A$3,300bn. Realizable band 4.1 / 5.4 / 6.3 / 6.8 / 8.4. Mode B return 5.4%.
5. Audit checklist
- [ ] Confirm M1 and M3 at a common date from RBA statistical tables (D3 / financial aggregates)
- [ ] Confirm ASX total (not just ASX 200) market cap at a stated date
- [ ] Confirm nominal GDP to the printed ABS annual figure (vs the ~A$2.7T round)
- [ ] Return: DMS Australia equity figure pinned to the printed DMS country page (~6.4%)
Canada
Purpose. Re-parameterise the CS engine to Canada using primary-source data, to the same standard as the US and UK calibrations. Every figure traces to a named primary source (Bank of Canada, Statistics Canada, TMX). Canada is structurally the cleanest non-US case: it uses M2 as the broad aggregate (directly comparable to the US, unlike the UK's M4), and M1+ as the transaction-active measure.
Status: macro block complete and primary-sourced. Realizable return via the same two-path method as the UK. For audit before/after wiring into the engine.
1. Macro parameters (all primary-sourced)
| Parameter | Canada value | Reference | Primary source |
|---|---|---|---|
| Broad money M2 | C$2,817 bn | Apr 2026 | Bank of Canada, M2 series |
| Transaction-active M1+ | C$1,734 bn | Dec 2025 | Bank of Canada (currency + all chequable deposits) |
| M^T / M2 ratio | ≈ 61.5% | - | constructed (see §2) |
| Nominal GDP | ≈ C$3.2 T | 2025 | US$2.32T (StatCan/IMF) × ~1.38 USD/CAD; cross-checks vs M2/GDP |
| Real trend growth g | ≈ 1.7% | 2025 | Statistics Canada (real GDP +1.7% in 2025) |
| Population | 41.47 M | Jan 2026 | Statistics Canada (41,472,081; note: first annual decline since 1867) |
| Equity market cap (domestic) | ≈ 193% of GDP ≈ C$6.2 T | Dec 2025 | TMX market cap ÷ StatCan GDP (CEIC); domestically-listed |
| Federal debt | ≈ 41% of GDP | Mar 2025 | Dept of Finance (federal accumulated deficit; total-govt net debt higher) |
Notes: - M2 and M1+ are one month apart (Apr 2026 / Dec 2025); ratio is stable, but same-date figures from the BoC E1 table are preferred for the published note. - GDP is derived (USD × FX) and cross-checked; the StatCan nominal-CAD annual figure would confirm to the decimal. The ~C$3.2T value is consistent with M2 at ~88% of GDP. - Market cap at ~193% of GDP is high (resource-heavy large-cap market), well above the US (~2.2×) only in that both exceed GDP, and far above the UK (~0.97×).
2. Construction of the transaction-active share (M^T / M2)
Canada is cleaner than the UK here. The Bank of Canada publishes M1+ with an explicit definition that is exactly the M^T construct:
M1+ (gross) = currency outside banks + personal and non-personal chequable deposits at chartered banks + all chequable deposits at trust and mortgage loan companies, credit unions and caisses populaires., Bank of Canada, monetary aggregate definitions.
Chequable = on-demand transactable = the transaction-active property M^T captures.
M^T (Canada) = M1+ = C$1,734 bn
M2 = C$2,817 bn
M^T / M2 = 61.5%
Finding: Canada's transaction-active share (~61.5%) sits between the US (51.35%) and the UK (69.7%). This is economically sensible and confirms the share is genuinely country-specific, not importable. The Canadian price-stability locus recomputes on 61.5%.
3. Realizable return (two-path method, same as UK)
Path 1: Production function (matched to Paper 5's Solow construct)
Canada is capital-intensive and resource-heavy, implying a capital share slightly above the US. Literature places the Canadian labour share around 0.60-0.62, so alpha_CA ≈ 0.38. Holding the K/Y construct matched to Paper 5 (3.0):
r0(CA) = alpha_CA / (K/Y) - delta = 0.38 / 3.0 - 0.05 = 7.67% (baseline; US 6.67%)
Attenuated by the same r→g compression Paper 5 uses (×0.639):
realizable (Mode B) ≈ 4.90%
Path 2: Historical realised returns (independent)
Dimson-Marsh-Staunton database (Canada is one of the 125-year continuous markets): Canadian long-run real equity return is on the order of ~5.6% real (1900-2024), close to the world 5.2% and slightly above the UK. (To pin to the printed DMS Canada page figure on final audit.)
Reconciliation
Realizable ~4.90% sits just below listed equity ~5.6%, the same consistent relationship found for the US (4.26% vs ~6.5%) and UK (4.68% vs 5.3%): the broad attenuated floor return lands just under levered listed equity. Canada realizable return (Mode B) ≈ 4.90%, band ~4.5-5.2%.
4. Engine changes (US → UK → Canada)
| Engine input | US | UK | Canada |
|---|---|---|---|
| Currency | $ | £ | C$ |
| Broad money | $22.4T (M2) | £3.27T (M4) | C$2.82T (M2) |
| M^T share | 51.35% | 69.7% | 61.5% |
| GDP | $30.8T | £3.04T | C$3.2T |
| Population | 342M | 69.5M | 41.5M |
| Market cap | $69T (~2.2×) | £2.96T (~0.97×) | C$6.2T (~1.93×) |
| Real growth | 2.0% | 1.2% | 1.7% |
| Baseline return | 6.67% | 7.33% | 7.67% |
| Realizable (Mode B) | 4.26% | 4.68% | 4.90% (band 4.5-5.2%) |
| Govt debt | ~102% | ~95% | ~41% federal |
5. Audit checklist
- [ ] M2 and M1+ pulled at a common date from BoC E1 table
- [ ] Nominal CAD GDP confirmed against StatCan annual figure (vs the USD×FX derivation)
- [ ] Market cap confirmed on domestically-listed basis at a stated date
- [ ] Labour share / alpha_CA confirmed to a printed StatCan or OECD figure (currently ~0.62 from literature)
- [ ] DMS Canada equity return confirmed to the printed country-page figure (~5.6%)
- [ ] Return: two-path central 4.90% + band 4.5-5.2%
Eurozone
This is not a standard country calibration. It is the framework's own boundary case. The UK and Canada are monetary sovereigns: each controls its own currency issuance, so each can implement CS unilaterally. The Eurozone cannot be treated the same way, and the reason is central to the framework, not incidental to it.
0. The prerequisite (read this first)
CS requires a monetary sovereign, an entity that controls issuance of the currency it distributes. In the euro area, no single member state has this. Germany, France, Italy, and the rest ceded monetary sovereignty to the ECB when they adopted the euro. This is exactly the fragility Paper 3 identifies via De Grauwe (2011): euro members borrow and operate in a currency they do not individually issue.
The consequence for CS is precise:
- A single member cannot implement CS alone. Germany cannot run citizen-issuance in euros, it does not control the euro. It would have to either leave the euro (regaining sovereignty) or persuade the whole union.
- The bloc can implement CS, but only as a bloc. If the euro-area members collectively agree to unified ECB citizen-issuance, then the union as a whole is the monetary sovereign the framework requires, and the mechanism works at euro-area scale.
- The barrier is political, not economic or mechanical. The money plumbing is arguably the cleanest of any region (the ECB publishes M1/M2/M3 with excellent detail). What is missing is the political integration to authorize union-level citizen-issuance.
The engine entry therefore models the euro area AS IF the bloc had agreed to implement CS collectively. It is a "what the numbers would be if the political prerequisite were met" case, not a claim that any single European government could switch this on. The engine must show this caveat whenever the Eurozone is selected, or it misrepresents the framework's own stated prerequisite.
1. Macro parameters (ECB / Eurostat primary; euro area, NOT EU-27)
Scope note: all figures are for the euro area (the ~20 members using the euro), not the EU-27. The EU-27 has ~449M people and ~EUR 17.9T GDP; the euro area is smaller. Mixing them would be an error.
| Parameter | Euro area value | Reference | Primary source |
|---|---|---|---|
| Broad money M3 | EUR 17.2 T | Nov 2025 | ECB (headline broad aggregate) |
| Transaction-active M1 | EUR 11.27 T | Apr 2026 | ECB (currency in circulation + overnight deposits) |
| M^T / M3 ratio | ≈ 65.5% | - | constructed (see §2) |
| Nominal GDP | ≈ EUR 15.9 T | 2025 | ECB (external debt EUR 17.00T = 107% GDP → 15.9T) |
| Real trend growth g | ≈ 1.4% | 2025 | ECB Dec-2025 projection (Statista 1.2%) |
| Population | ≈ 349 M | 2025 | Eurostat (euro area; distinct from EU-27 449M) |
| Equity market cap | ≈ 68% of GDP ≈ EUR 10.8 T | 2025 | Eurostat/Wikipedia (bank-based economy; US is 170%) |
| Government debt | ≈ 88% of GDP | 2025 | Maastricht euro-area average |
Structural note: the euro-area listed-equity market is small relative to GDP (~68%) because Europe is bank-based, not market-based (EU bank assets ≈ 300% of GDP vs 85% in the US). This materially lowers the structural-buyer flow as a share of the equity market and is a genuine euro-area feature, not an artifact.
2. Transaction-active share (M^T / M3)
The ECB's M1 is a textbook transaction-active measure:
M1 (narrow money) = currency in circulation (banknotes and coins) + overnight deposits. , ECB, monetary aggregate definitions.
Overnight deposits = immediately spendable = the M^T property.
M^T (euro area) = M1 = EUR 11.27 T
M3 = EUR 17.2 T
M^T / M3 = 65.5%
The euro-area share (~65.5%) is high, close to the UK (69.7%), and well above the US (51.35%). Broad M3 includes marketable instruments (repos, MMF shares, short debt securities) that most households never transact in, so the transaction-active core is a large fraction. The share is genuinely euro-area-specific; the US and UK values are not imported.
3. Realizable return (two-path, same method)
Path 1: Production function (matched to Paper 5)
Euro-area labour share is sourced directly, NOT copied from the UK. Eurostat reports compensation of employees at 48.6% of GDP (2025, unadjusted), and the ECB's adjusted wage share (corrected for self-employed, over gross value added) at ~0.615. That adjusted figure is the right basis, and it is slightly LOWER than the UK's 0.63, so the euro-area capital share is slightly higher: alpha_EA ≈ 0.385 (vs UK 0.37). Holding K/Y = 3.0:
r0(EA) = 0.385/3.0 - 0.05 = 7.83% (baseline) -> ~5.00% realizable (Mode B)
The euro area is therefore NOT identical to the UK (a natural question, since both have ~0.6x labour shares): UK baseline 7.33% / realizable 4.68%; euro-area baseline 7.83% / realizable 5.00%. The small gap is real and traces to the sourced labour-share difference.
Path 2: Historical realised returns
DMS pan-European / Germany + France long-run real equity ≈ 4.5-5.0%, lower than the UK (5.3%) and US (~6.5%), consistent with continental Europe's lower historical equity returns and the World Wars' capital destruction in the DMS record.
Reconciliation (honest note on the tightest fit of the four)
Realizable ~5.00% sits at the TOP of the euro-area historical equity range (~4.5-5.0%), rather than comfortably below it as in the US, UK, and Canada cases. The two paths are still close and consistent, but the euro-area reconciliation has the least slack of the four calibrations. This is flagged rather than hidden: the production-function path and the historical path agree to within their uncertainty, but a conservative reading would place the euro-area realizable return slightly lower (toward 4.6-4.8%) to preserve the broad-below-equity ordering. Euro-area realizable return (Mode B) ≈ 5.00%, band 3.8-5.8%, with a conservative alternative ~4.7%.
4. Engine changes (adds € as a fourth entry)
| Engine input | US | UK | Canada | Eurozone |
|---|---|---|---|---|
| Currency | $ | £ | C$ | € |
| Broad money | $22.4T (M2) | £3.27T (M4) | C$2.82T (M2) | €17.2T (M3) |
| M^T share | 51.35% | 69.7% | 61.5% | 65.5% |
| GDP | $30.8T | £3.04T | C$3.2T | €15.9T |
| Population | 342M | 69.5M | 41.5M | 349M |
| Market cap | $69T (~2.2×) | £2.96T (~0.97×) | C$6.2T (~1.93×) | €10.8T (~0.68×) |
| Real growth | 2.0% | 1.2% | 1.7% | 1.4% |
| Realizable (Mode B) | 4.26% | 4.68% | 4.90% | 5.00% |
| Govt debt | ~102% | ~95% | ~41% | ~88% |
| Sovereign? | yes | yes | yes | only as a bloc (see §0) |
The Eurozone entry carries a visible caveat in the engine noting the political prerequisite.
5. Audit checklist
- [ ] Confirm M1 and M3 at a common date from the ECB Data Portal (BSI series)
- [ ] Confirm euro-area (not EU-27) population and market cap at stated dates
- [ ] Confirm the euro-area listed-equity/GDP ratio (~68%) against an ECB/FESE figure
- [ ] Return: two-path central 4.68% + band; DMS Europe equity cross-check to the printed figure
- [ ] Caveat text (§0) displayed in the engine whenever Eurozone is selected
India
India is a monetary sovereign (RBI issues the rupee), a standard unilateral calibration mechanically. But as a genuine emerging market, it differs from the developed-economy calibrations in two ways that are flagged honestly below: a low transaction-active share (term-deposit-heavy savings) and a high-but-volatile equity return.
Status: macro block primary-sourced (RBI, MoSPI, NSE, IMF).
1. Macro parameters (engine units: ₹ trillion)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M3 | ₹281.4 T | Jul 2025 | Reserve Bank of India |
| Transaction-active M1 | ₹80.6 T | early 2026 | RBI (currency + demand deposits + other deposits with RBI) |
| M^T / M3 ratio | ≈ 28% | - | constructed (see §2), LOW, like Korea but for a different reason |
| Nominal GDP | ≈ ₹330.7 T | 2024-25 | MoSPI (~US$4.1T) |
| Real trend growth g | ≈ 6.5% | 2025-26 | IMF / RBI (fastest in the set by far) |
| Population | ≈ 1,476 M (1.48 bn) | 2025 | UN / Census (world's most populous) |
| Equity market cap | ≈ ₹438.9 T ≈ 133% of GDP | Dec 2024 | NSE (US$5.13T; 5th-largest exchange) |
| Government debt | ≈ 80% of GDP | 2025 | IMF (general government) |
| Inflation | ~2-4% (within RBI band) | 2025 | RBI, notably benign for an EM |
India is the fastest-growing economy in the set (~6.5% real), which is why the real-growth slider range was widened to accommodate it. Its equity market is now the world's 5th-largest by cap.
2. Transaction-active share (M^T / M3): low, and why
RBI's M1 (narrow money) = currency with the public + demand deposits + other deposits with RBI, the transaction-active measure. M3 = M1 + net time deposits.
M^T (India) = M1 = ₹80.6 T
M3 = ₹281.4 T
M^T / M3 ≈ 28%
This is low (developed set is 50-80%), and it is a genuine structural feature, not an error. Time deposits are 74.6% of India's M3, Indians hold most of their money in fixed/term deposits rather than transaction accounts, reflecting a high-savings culture and attractive term-deposit rates. This is the same category of low-ratio situation as South Korea (30%), though the cause differs (Korea's broad M2 definition vs India's term-deposit-heavy holdings). Flagged so the low share is understood as real rather than a data slip.
3. Realizable return: high but volatile (EM caution applied)
Path 1: Production function
India's labour share is lower than the developed set (~0.52; large informal/agricultural sector, high capital share in the formal economy) → alpha ≈ 0.48 → production-function baseline ~11% → ~7.0% realizable. That is the highest production-function figure in the entire set.
Path 2: Historical realised returns
Indian equity (Sensex/Nifty) has delivered strong long-run real returns, roughly 6.5-7% real over recent decades, among the best-performing markets globally, but with substantially higher volatility than developed markets (currency risk, EM drawdowns, valuation swings).
Resolution: conservative despite both paths pointing high
Both paths point to an above-average return, and a naive reading would place India at the top of the set (~7%). But emerging-market equity returns carry materially higher volatility and drawdown risk than the developed markets, and the CS structural-buyer mechanism should not be calibrated to the top of a volatile EM range. The central realizable is therefore set conservatively at 5.5% (Mode B), band 4.2-6.4%, above the developed set (reflecting genuinely higher growth and returns) but well below the ~7% production-function figure, to respect EM volatility. This is the honest middle: India's returns are real and high, but their variance argues against anchoring on the peak.
4. Broad citizen ownership under Mode Ω (higher here, and honestly so)
Running India in Mode Ω produces a citizen market-ownership share of ~47% (structural-buyer flow ~3.74% of market cap per year; active tradable float ~53%). This is far above the US figure (~10% realized, ~20% ceiling), and it is a real result, not a calibration slip.
The ownership ceiling is set by the flow-to-growth ratio c / g, not by a fixed percentage. India pushes both terms: it is the fastest grower in the set (g ~6.5%, enlarging the growth-funded budget) and has a low transaction-active share (M^T/M3 ~28%, so more of the budget routes to the asset/floor circuit), against an equity market that, while the 5th-largest globally, is not large enough to dilute that flow. High flow into a proportionally smaller market gives a high c/g ceiling (~57%) and a realized share near 47%.
This is reported as the true output of the design. Mode Ω solves for price stability; it is not tuned to hold ownership down to a target, and it should not be. The honest framing is therefore country-dependent: in the US the structural buyer settles near a tenth of the market, but in shallower or faster-growing economies citizens can end up owning a much larger share, up toward half in India’s case. The bound that matters is still load-bearing (ownership stays well inside the 100% that feasibility forbids, and the majority of the market remains freely traded), but the specific share is a function of the economy, not a universal ~10%.
5. Engine values
Currency ₹. M^T share 28%. Defaults: M3 ₹281.4T, GDP ₹330.7T, pop 1,476M, market cap ₹438.9T. Real growth 6.5%, pop growth 0.9%. Realizable band 4.2 / 5.5 / 6.4 / 6.9 / 8.5. Mode B return 5.5%.
6. Audit checklist
- [ ] Confirm M1 and M3 at a common date from the RBI Weekly Statistical Supplement
- [ ] Confirm nominal GDP to the printed MoSPI annual figure (new 2022-23 base series)
- [ ] Confirm NSE (or NSE+BSE combined) market cap at a stated date
- [ ] Return: pin to an India equity-return series (e.g. Nifty total-return real); the 5.5% central is a deliberate EM-volatility discount to the ~7% production-function figure, not a sourced point
- [ ] Population growth: confirm current annual rate (~0.9%, decelerating)
Indonesia
Indonesia is a monetary sovereign (Bank Indonesia issues the rupiah), a standard unilateral calibration mechanically. As an emerging market (like India and Mexico), it carries the usual EM caution, but it is the cleanest of the emerging-market fits: a well-managed, low-inflation economy (BI-Rate ~4.75%, CPI ~2-3%) with strong, stable real growth (~5%) and the fourth-largest population in the world. Its two realizable-return paths roughly converge rather than diverge, so no sharp downward resolution is required.
Status: macro block primary-sourced (Bank Indonesia, BPS, IDX).
1. Macro parameters (engine units: Rp trillion)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M2 | Rp10,090 T | Feb 2026 | Bank Indonesia (broad money) |
| Transaction-active M1 | ≈ Rp5,550 T | early 2026 | Bank Indonesia (currency + demand deposits) |
| M^T / M2 ratio | ≈ 55% | - | constructed (see §2), M1/M2 |
| Nominal GDP | ≈ Rp23,821 T | 2025 | BPS (~US$1.44T; per-capita US$5,083) |
| Real trend growth g | ≈ 5.1% | 2025 | BPS (5.11% in 2025; 5.03% in 2024, very stable) |
| Population | ≈ 287.9 M | 2026 | BPS / IMF (4th most populous) |
| Equity market cap | ≈ Rp11,030 T ≈ 46% of GDP | 2025-26 | IDX / CEIC (moderate depth, EM) |
| Inflation | ~2-3% | 2025-26 | Bank Indonesia (BI-Rate 4.75%, well-anchored) |
Indonesia is a strong-growth economy (~5% real, remarkably stable across 2024-25) with a well-managed currency and low inflation, a favourable macro backdrop by emerging-market standards. Its equity market is of moderate depth (~46% of GDP), deeper than India or Mexico but still below the developed set, which matters for the ownership arithmetic in §4.
2. Transaction-active share (M^T / M2): mid-range
Bank Indonesia's M1 = currency outside banks + rupiah demand deposits, the transaction-active measure. M2 = M1 + quasi-money (time and savings deposits, foreign-currency deposits).
M^T (Indonesia) = M1 ≈ Rp5,550 T
M2 ≈ Rp10,090 T
M^T / M2 ≈ 55%
At ~55%, Indonesia sits mid-range (developed set is 50-80%; India and Korea are ~28-30%). Just over half of Indonesian broad money is transaction-active, typical of a middle-income economy with a substantial but not dominant term-deposit segment. This is a clean primary-sourced ratio; no adjustment flag is needed.
3. Realizable return: two paths that roughly converge
Path 1: Production function
Indonesia's labour share is ~0.58 → alpha ≈ 0.42, with a capital-output ratio ~3.0 → production-function baseline ~6.0% → ~5.0% realizable. A solid mid-set figure, supported by sustained 5% real growth.
Path 2: Historical realised returns
Indonesian equity (Jakarta Composite) has delivered long-run real returns in the ~5-6% range, better than Mexico or Turkey and closer to India, reflecting a diversified, consumption-driven economy with a relatively stable currency. Standard market-based forward estimates (mean-reversion of a ~46%-of-GDP market cap) also point to mid-single-digit real returns.
Resolution: paths agree, so a mid-single-digit central holds
Unlike Mexico and Turkey, Indonesia's two paths do not sharply diverge: the production function says ~5.0-6.0% and the realized history says ~5-6%. The central realizable is therefore set at 5.0% (Mode B), band 4.0-6.0%, with standard EM caution applied for market depth and currency risk but without the aggressive downward adjustment Mexico and Turkey require. This is the honest call: where a production estimate and a realized history agree, the convergence is the finding, and Indonesia is the emerging market in the set where they agree best.
4. Broad citizen ownership under Mode Ω
Running Indonesia in Mode Ω produces a citizen market-ownership share that is elevated relative to the US but below India and Mexico. The mechanism is the same flow-to-growth ratio c / g: Indonesia's strong growth (g ~5.1%) enlarges the growth-funded budget (pushing the share up), but its deeper market (~46% of GDP, versus India's ~10-15% and Mexico's ~28%) enlarges the denominator (pulling the share down). The deeper market is the dominant term, so the ceiling lands below the shallower-market EMs.
As with every country, this is reported as the true output of the design, not tuned to a target. The honest framing holds: a moderate-depth market and strong growth roughly offset, leaving Indonesia's citizen ownership share above the US ~10% but below the shallow-market cases.
5. Engine values
Currency Rp. M^T share 55%. Defaults: M2 Rp10,090T, GDP Rp23,821T, pop 287.9M, market cap Rp11,030T. Real growth 5.1%, pop growth 0.8%. Realizable band 4.0 / 5.0 / 6.0 / 7.5 / 7.5. Mode B return 5.0%.
6. Audit checklist
- [ ] Confirm M1 and M2 at a common date from the Bank Indonesia broad-money release
- [ ] Confirm nominal GDP to the printed BPS figure (annual, current prices)
- [ ] Confirm IDX domestic market cap at a stated date (the ~46%-of-GDP ratio feeds §4)
- [ ] Return: the 5.0% central reflects convergence of the production-function (~5-6%) and realized JCI (~5-6%) paths; pin to an Indonesian equity total-return real series
- [ ] Population growth: confirm current annual rate (~0.8%)
Japan
Japan is a monetary sovereign (BoJ issues the yen), so it can implement CS unilaterally, a standard calibration like the UK and Canada. But Japan is the case where the two return paths diverge most, and that divergence is handled explicitly below.
Status: macro block complete and primary-sourced (BoJ, MoF, Statistics Bureau, IMF). Return anchored on historical (DMS) rather than production-function, with reasoning shown.
1. Macro parameters (all primary-sourced)
| Parameter | Japan value | Reference | Primary source |
|---|---|---|---|
| Broad money M3 | ¥1,586 T | 2024 | Bank of Japan (fuller coverage incl. Japan Post Bank) |
| Transaction-active M1 | ¥1,103 T | May 2026 | Bank of Japan (currency + demand deposits) |
| M^T / M3 ratio | ≈ 69.5% | - | constructed (see §2) |
| Nominal GDP | ≈ ¥600 T | 2025 | Ministry of Finance (~US$4.0T) |
| Real trend growth g | ≈ 1.0% | 2025 | IMF (recovering, above potential H1 2025); exiting deflation |
| Population | 123.05 M | 2025 census | Statistics Bureau (record 2.5% fall from 2020) |
| Equity market cap (TSE) | ≈ ¥1,200 T ≈ 200% of GDP | 2025 | Ministry of Finance / Japan Exchange Group |
| Government debt | ≈ 230% of GDP | 2025 | IMF (highest among advanced economies) |
Notes: - M3, not M2, is the broad aggregate. Japan's M2 (¥1,298T) excludes Japan Post Bank, a huge deposit-taker; M3 includes it, giving fuller coverage (same logic as ECB M3 / UK M4). Using M2 would give an implausibly high M^T share (~85%); M3 gives the comparable 69.5%. - Debt at ~230% is the highest of any country in the set, but Japan holds most of it domestically and has a large net international investment position, so it is sustainable in a way headline debt-to-GDP understates.
2. Transaction-active share (M^T / M3)
BoJ's M1 is a textbook transaction-active measure:
M1 = currency in circulation + deposit money (demand deposits: current, ordinary, savings, deposits at notice)., Bank of Japan, Money Stock Statistics.
M^T (Japan) = M1 = ¥1,103 T
M3 = ¥1,586 T
M^T / M3 = 69.5%
Close to the UK (69.7%) and Eurozone (65.5%); above the US (51.35%). Japan's high cash/deposit holdings (households hold ~¥1.1 quadrillion in cash and deposits) make the transaction-active core a large fraction of broad money.
3. Realizable return: the divergence case (handled explicitly)
Japan is where the two independent return paths DISAGREE, and the disagreement is itself informative.
Path 1: Production function
Japan's capital share is high and rising: productivity rose 18% (2000-2024) while real compensation per worker fell 4% (ILO/OECD), and unit profits have outpaced unit labour costs. That implies alpha_JP ≈ 0.42 (labour share ~0.58). Mechanically:
r0(JP) = 0.42/3.0 - 0.05 = 9.00% -> ~5.75% realizable (Mode B)
Path 2: Historical realised returns
Japan's long-run real equity return in the DMS database is among the LOWEST of any developed market: ~4.0-4.5% real (1900-2024), reflecting WWII capital destruction and the post-1990 "Lost Decades" of deflation and weak corporate governance.
Resolution: historical anchor wins (and why)
The paths diverge by ~1.5 percentage points, the widest gap of any country in the set. The production-function path OVERSTATES the realizable return for Japan, because Japan's high notional capital share has historically NOT translated into shareholder returns (poor capital allocation, cross-holdings, deflation). The honest central estimate anchors on the historical path:
**Japan realizable return (Mode B) ≈ 4.2%, band 3.2-4.9%.**
This coincidentally lands near the US 4.3%, but for the OPPOSITE reason: the US has a moderate capital share and moderate equity returns, while Japan has a high capital share whose returns leak away before reaching shareholders. Recent governance reform (TSE's book-value campaign, rising ROE) may lift future returns toward the production-function figure, so the band's upper end (4.9%) captures that upside; the central estimate stays conservative.
4. Engine values
Currency ¥. M^T share 69.5%. Defaults: M3 ¥1,586T, GDP ¥600T, pop 123M, market cap ¥1,200T. Realizable band 3.2 / 4.2 / 4.9 / 5.3 / 6.5. Mode B return 4.2%.
5. Audit checklist
- [ ] Confirm M1 and M3 at a common date from the BoJ Money Stock Statistics
- [ ] Confirm nominal GDP to the printed Cabinet Office annual figure (vs the ~¥600T round)
- [ ] Confirm TSE market cap on a domestically-listed basis at a stated date
- [ ] Return: DMS Japan equity figure pinned to the printed DMS country page (~4.0-4.5%)
- [ ] Revisit the return upward if TSE governance reforms durably lift ROE/equity returns
Mexico
Mexico is a monetary sovereign (Banco de México issues the peso), a standard unilateral calibration mechanically. As an emerging market (like India), it is flagged honestly on two fronts: a shallow equity market (~28% of GDP) and a realizable-return estimate where the two estimation paths genuinely diverge, resolved conservatively toward the weaker realized history rather than the more favourable production-function figure.
Status: macro block primary-sourced (Banxico, INEGI, SHCP, BMV).
1. Macro parameters (engine units: Mex$ trillion)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M2 | Mex$16.5 T | Mar 2026 | Banco de México (Agregados Monetarios) |
| Transaction-active M1 | ≈ Mex$8.25 T | early 2026 | Banxico (currency + immediate-demand deposits) |
| M^T / M2 ratio | ≈ 50% | - | constructed (see §2), M1/M2 ≈ 8.25/16.5 |
| Nominal GDP | ≈ Mex$35.5 T | Mar 2026 | INEGI / SHCP (~US$2.03T) |
| Real trend growth g | ≈ 1.8% | 2025-26 | INEGI (2025 weak ~0.6-0.8%); Banxico 2026 proj 1.6% |
| Population | ≈ 130.8 M | Jan 2026 | INEGI / CONAPO / UN (10th most populous) |
| Equity market cap | ≈ Mex$9.9 T ≈ 28% of GDP | 2025 | BMV / CEIC (US$508bn; shallow, EM feature) |
| Government debt | ≈ 50% of GDP | Apr 2026 | SHCP (SHRFSP, broadest measure; 18.6T MXN) |
| Inflation | ~3.5-4% | 2025-26 | Banxico (near the upper target band) |
Mexico is a mid-growth economy (~1.8% real trend, weaker in 2025 at ~0.6-0.8%), with a peso that has seen repeated historical crises. Its equity market, while liquid, is small relative to GDP (~28%), which matters for the ownership arithmetic in §4.
2. Transaction-active share (M^T / M2): mid-range
Banxico's M1 = banknotes and coins held by the public + immediate-demand deposits, the transaction-active measure. M2 = M1 + resident time deposits, debt mutual-fund shares, and repo creditors.
M^T (Mexico) = M1 ≈ Mex$8.25 T
M2 ≈ Mex$16.5 T
M^T / M2 ≈ 50%
At ~50%, Mexico sits mid-range (developed set is 50-80%; India and Korea are ~28-30%). Roughly half of Mexican broad money is held in transaction-active form and half in term/savings instruments, a balance typical of a middle-income economy with a sizeable but not dominant term-deposit segment. No adjustment flag is needed on this figure; it is a clean primary-sourced ratio.
3. Realizable return: two paths that diverge (EM caution applied)
Path 1: Production function
Mexico's labour share is ~0.56 (a large informal sector, moderate formal capital share) → alpha ≈ 0.44 → production-function baseline ~9.8% → ~6.2% realizable. That is a solid mid-set figure, below India's ~7.0% but comfortably above the developed floor.
Path 2: Historical realised returns
Mexican equity (IPC / Bolsa) has delivered materially weaker long-run real returns than India, roughly ~4.5% real and among the lower emerging markets in the DMS dataset, with high volatility driven by repeated peso crises (1976, 1982, 1994) and persistent currency risk. The shallow market (~28% of GDP) compounds the caution.
Resolution: weight the weaker realized path
Unlike India, where both paths pointed high and agreed, Mexico's two paths diverge: the production function says ~6.2% but the realized equity history says ~4.5%. When a structural-buyer mechanism must pick one, anchoring on the more favourable production-function number would ignore a century of actual Mexican equity experience. The central realizable is therefore set conservatively at 4.7% (Mode B), band 3.7-5.7%, close to the realized-history path, with the production-function figure retained only as the top of the band. This is the honest call: the divergence itself is the finding, and where a production estimate and a realized history disagree for an EM, the realized history plus currency risk should dominate.
4. Broad citizen ownership under Mode Ω
Running Mexico in Mode Ω produces a citizen market-ownership share that is elevated relative to the US, for the same structural reason as India: a shallow equity market (~28% of GDP) means the structural-buyer flow is large relative to market size, pushing the ownership ceiling up.
The ceiling is set by the flow-to-growth ratio c / g, not a fixed percentage. Mexico's moderate growth (g ~1.8%) gives a smaller growth-funded budget than India's, so the ownership share lands below India's ~47% but still above the developed set: the shallow market is the dominant term. As with every country, this is reported as the true output of the design, not tuned to a target. The honest framing holds: in shallower markets citizens can end up owning a larger share than the US ~10%, and Mexico's ~28%-of-GDP market makes it one of those cases, though its slower growth keeps the share below India's.
5. Engine values
Currency Mex$. M^T share 50%. Defaults: M2 Mex$16.5T, GDP Mex$35.5T, pop 130.8M, market cap Mex$9.9T. Real growth 1.8%, pop growth 0.6%. Realizable band 3.7 / 4.7 / 5.7 / 7.2 / 7.2. Mode B return 4.7%.
6. Audit checklist
- [ ] Confirm M1 and M2 at a common date from the Banxico Agregados Monetarios release
- [ ] Confirm nominal GDP to the printed INEGI/SHCP figure (seasonally-adjusted annualized)
- [ ] Confirm BMV domestic market cap at a stated date (the ~28%-of-GDP ratio is the load-bearing input for §4)
- [ ] Return: the 4.7% central is a deliberate weighting toward realized IPC/Bolsa history (~4.5%) over the production-function figure (~6.2%); pin to a Mexican equity total-return real series
- [ ] Population growth: confirm current annual rate (~0.6%, decelerating)
Norway
Norway is a monetary sovereign (Norges Bank issues the krone), a standard unilateral calibration. Norway is conceptually interesting for CS: it already runs the world's largest sovereign wealth fund (GPFG, NOK 19.7T, more than 3x GDP), a real "structural buyer" operating at global scale, though invested abroad rather than domestically as CS would direct.
Status: macro block primary-sourced (Norges Bank, Statistics Norway, IMF). One soft spot: the transaction-active M1 level is not cleanly pinned (see §2 and audit checklist).
1. Macro parameters (engine units: NOK trillions)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M2/M3 | NOK 3.57 T | Apr 2026 | Norges Bank / Statistics Norway |
| Transaction-active M1 | ~NOK 2.2 T (estimated) | - | see §2, NOT cleanly pinned |
| M^T / broad ratio | ≈ 62% (provisional) | - | flagged for confirmation |
| Nominal GDP | ≈ NOK 5.3 T | 2025 | Statistics Norway (~US$493bn) |
| Real trend growth g | ≈ 1.8% | 2025-26 | IMF |
| Population | 5.65 M | 2025 | Statistics Norway |
| Equity market cap | ≈ 75% of GDP ≈ NOK 4.0 T | 2025 | Euronext Oslo (domestic) |
| Government debt | ≈ 43% of GDP | 2024 | IMF (and enormous net assets via GPFG) |
The sovereign wealth fund context matters: Norway's fiscal position is uniquely strong (budget surplus ~14-16% of GDP including petroleum), so the "affordability" framing of CS looks very different here than for a debtor nation.
2. Transaction-active share: provisional, flagged
Norway's broad money (M2) is NOK 3.57T (Norges Bank). The transaction-active M1 (currency + transaction deposits) was NOT cleanly sourced at a current level in this pass; the engine uses a provisional M^T/broad ratio of 0.62, consistent with the Nordic/European cluster (UK 70%, Eurozone 66%, Switzerland 63%). This is the one genuinely unconfirmed input in the Norway block and is flagged in the audit checklist. It should be replaced with the actual Norges Bank M1 level before the Norway figures are treated as final.
3. Realizable return
Norwegian labour share ~0.58 → alpha ≈ 0.42 → production-function ~5.75% realizable. But DMS Norway real equity is ~4.3% (moderate; oil-cycle volatility, smaller market). The paths diverge somewhat (like a milder Japan), so the central estimate leans toward the historical: 4.8% (Mode B), band 3.7-5.6%.
4. Engine values
Currency NOK. M^T share 0.62 (provisional). Defaults: broad NOK 3.57T, GDP NOK 5.3T, pop 5.65M, market cap NOK 4.0T. Realizable band 3.7 / 4.8 / 5.6 / 6.0 / 7.4. Mode B return 4.8%.
5. Audit checklist
- [ ] PIN THE M1 LEVEL from Norges Bank and recompute M^T/broad (currently provisional 0.62)
- [ ] Confirm broad money aggregate choice (M2 vs M3) and level at a stated date
- [ ] Confirm Euronext Oslo domestic market cap at a stated date
- [ ] Return: DMS Norway equity figure pinned to the printed DMS country page (~4.3%)
- [ ] Consider a note on the GPFG as a real-world analogue to the CS structural buyer
Saudi Arabia
Saudi Arabia is the most qualified fit in the set, and is included with two caveats stated plainly rather than buried. First, the riyal is hard-pegged to the US dollar (SAR 3.75, unchanged since 1986), so Saudi Arabia is not a free-floating monetary sovereign in the way the other calibrations are: SAMA's policy rate follows the US Federal Reserve by necessity, and the peg constrains independent control of the domestic money quantity. Second, the headline equity market is dominated by the state, one company (Aramco) and government-related entities account for the bulk of it, so the tradeable, citizen-accessible market is far smaller than the headline suggests. Both points bear directly on the framework's premises and are handled below.
Status: macro block primary-sourced (SAMA, GASTAT, Tadawul). Peg and market- concentration caveats foregrounded (§0 and §4).
0. The peg caveat (read first)
The Citizens Standard assumes a country issues its own free-floating currency and can control the quantity of its transaction-active money. Saudi Arabia's dollar peg is a genuine departure from that premise. Under the peg, a large citizens-dividend money injection would create pressure on the exchange rate (capital would tend to flow out, testing the 3.75 parity) unless it were sterilized or matched by reserve movements. SAMA holds ample reserves (net foreign assets ~US$415bn, ~15 months of imports), so the peg is credible and defensible, but the constraint is real: Saudi Arabia could run the CS levers on its domestic money base only to the extent the peg allows, and a full-strength dividend would be in tension with the peg. The calibration is presented as a what-if for a pegged economy, not as a claim that the mechanism operates as freely as it does for a floating sovereign. This is the honest seam, and it is surfaced rather than hidden.
1. Macro parameters (engine units: SR trillion)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M2 | ≈ SR2.9 T | 2025 | SAMA (M3 SR3.12T; M2 excludes some quasi-money) |
| Transaction-active M1 | ≈ SR1.65 T | 2025 | SAMA (currency + demand deposits ~46.5% of M3) |
| M^T / M2 ratio | ≈ 57% | - | constructed (see §2), M1/M2 |
| Nominal GDP | ≈ SR4.79 T | 2025 | GASTAT (~US$1.275T; rebased +14% May 2025) |
| Real trend growth g | ≈ 4.5% | 2025 | GASTAT (oil-driven, volatile; −0.8% in 2024) |
| Population | ≈ 33.5 M | 2025 | GASTAT (large expat share ~42%; growth ~1.5%) |
| Equity market cap (free-float-adjusted) | ≈ SR1.9 T ≈ 40% of GDP | 2024-25 | Tadawul, ex-Aramco/GRE (see §4; headline ~210%) |
| Inflation | ~2.0-2.3% | 2025 | GASTAT (low, anchored by the dollar peg) |
Saudi Arabia has strong but oil-cyclical real growth (4.5% in 2025, but −0.8% in 2024 on OPEC+ production cuts) and very low, peg-anchored inflation (~2%). The economy is concentrated: the hydrocarbon complex is ~35-40% of GDP on a broad definition, and Vision-2030 diversification is under way but incomplete.
2. Transaction-active share (M^T / M2): mid-range
SAMA's M1 = currency outside banks + demand deposits, the transaction-active measure. M2 = M1 + time and savings deposits; M3 adds other quasi-monetary deposits.
M^T (Saudi Arabia) = M1 ≈ SR1.65 T
M2 ≈ SR2.9 T
M^T / M2 ≈ 57%
At ~57%, Saudi Arabia sits mid-range (developed set 50-80%; India and Korea ~28-30%; Mexico ~50%). Demand deposits are the largest single component of Saudi broad money, giving a transaction-active share a little above Mexico's. This is a clean primary-sourced ratio; the peg caveat in §0 concerns money-quantity control, not the composition measured here.
3. Realizable return: production-function baseline, oil and concentration caution
Path 1: Production function
Saudi Arabia's capital share is high (a capital- and resource-intensive economy) → alpha ≈ 0.50, capital-output ratio ~3.2 → production-function baseline ~6.2% → ~4.5% realizable.
Path 2: Historical realised returns and the peg
Tadawul's long-run real returns have been modest and oil-cyclical. One axis actually works in Saudi Arabia's favour relative to other EMs: the dollar peg removes currency risk, a Saudi return in riyals is, by construction, a return in dollars, unlike Turkey or Mexico where FX depreciation erodes realized returns. But this is offset by heavy oil-cyclicality and by the market- concentration problem in §4: the freely tradeable market is small and dominated by a few state-linked names.
Resolution: mid-single-digit, with concentration rather than currency the binding caution
The central realizable is set at 4.5% (Mode B), band 3.5-5.5%. Currency risk is low (the peg), so the downward adjustment here is driven not by FX (as in Turkey/Mexico) but by oil- cyclicality and the shallow, state-dominated free float. The high band assumes Vision-2030 diversification broadens the tradeable market; the low band assumes continued oil dependence and concentration. This is the honest call for a pegged, oil-concentrated economy.
4. Broad citizen ownership under Mode Ω, and the free-float adjustment
The headline Tadawul market cap is very large, on the order of 210% of GDP (~US$2.7T). Taken at face value this would make Saudi Arabia look like a deep-market case where citizen ownership barely moves. That would be misleading. Roughly 67% of the exchange is Aramco alone, and government-related entities (the sovereign fund PIF and pension fund GOSI) hold ~64% of total market value; foreign investors hold only ~4%. The freely tradeable, citizen-accessible market is therefore far smaller, on the order of ~40% of GDP once Aramco and the state blocks are stripped out. The engine uses this free-float-adjusted figure (~SR1.9T), not the headline, because the ownership mechanism concerns shares citizens can actually acquire.
On the adjusted market, Saudi Arabia behaves like a moderate-to-shallow-market case: the structural-buyer flow is meaningful relative to the tradeable float, so the citizen ownership share comes out above the US ~10%. As always this is the true output of the design, not a target, and it rests on the free-float adjustment above, which is the load-bearing honesty in this calibration.
5. Engine values
Currency SR. M^T share 57%. Defaults: M2 SR2.9T, GDP SR4.79T, pop 33.5M, market cap SR1.9T (free-float-adjusted). Real growth 4.5%, pop growth 1.5%. Realizable band 3.5 / 4.5 / 5.5 / 6.9 / 6.9. Mode B return 4.5%.
6. Audit checklist
- [ ] Peg: confirm the calibration is read as a pegged-economy what-if (§0); a full-strength dividend is in tension with the 3.75 parity
- [ ] Confirm M1 and M2 (or M3 components) at a common date from the SAMA monthly bulletin
- [ ] Confirm nominal GDP to the printed GASTAT figure (rebased series, current prices)
- [ ] Market cap: confirm the free-float-adjusted figure ex-Aramco/GRE (~40% of GDP), not the ~210% headline; this is the load-bearing input for §4
- [ ] Return: the 4.5% central reflects low FX risk (peg) offset by oil-cyclicality and concentration; pin to a Tadawul real total-return series
South Korea
South Korea is a monetary sovereign (Bank of Korea issues the won), a standard unilateral calibration. Its distinctive feature is an unusually broad M2 definition that makes its transaction-active share the lowest in the set; this is flagged, not smoothed over.
Status: macro block primary-sourced (Bank of Korea, Korea Exchange, Statistics Korea, IMF).
1. Macro parameters
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M2 | ₩4,472 T | Oct 2025 | Bank of Korea |
| Transaction-active M1 | ₩1,357 T | Feb 2026 | Bank of Korea (cash + demand + instant-access) |
| M^T / M2 ratio | ≈ 30.3% | - | constructed (see §2), the LOW outlier of the set |
| Nominal GDP | ≈ ₩2,560 T | 2025 | Bank of Korea (~US$1.87T) |
| Real trend growth g | ≈ 1.8% | 2025 | Bank of Korea / IMF |
| Population | 51.6 M | 2025 | Statistics Korea |
| Equity market cap | ≈ 149.6% of GDP ≈ ₩3,830 T | Dec 2025 | Korea Exchange (KOSPI+KOSDAQ) / CEIC |
| Government debt | ≈ 50% of GDP | 2025 | IMF (low among the set) |
2. Transaction-active share (M^T / M2): the low outlier, explained
M^T (Korea) = M1 = ₩1,357 T
M2 = ₩4,472 T
M^T / M2 = 30.3%
This is genuinely low (US 51%, others 60-70%), and the reason is a definition quirk, not a real difference in transactional money. The IMF has repeatedly urged Korea to revise its M2: Korea's M2 includes ETFs, mutual-fund beneficiary certificates, and other market instruments that the US, Europe, and Japan exclude. That inflates the M2 denominator. Excluding those, the BoK's own "adjusted" M2 growth is materially lower, and the implied M^T share would be higher (closer to ~40%). The BoK began publishing a securities-excluded M2 series from Nov 2025.
Recommendation: the 30.3% figure is defensible as the headline-M2 ratio, but a fairer cross-country comparison would use the securities-excluded M2 (raising M^T/M2 toward ~38-42%). Flagged in the audit checklist; the engine uses 30.3% as the sourced headline value with this caveat noted.
3. Realizable return
Korea's labour share ~0.60 → alpha ≈ 0.40 → production-function baseline 8.33% → ~5.32% realizable. But Korea has long traded at a "Korea discount" (low P/E, governance/chaebol concerns), so realized equity returns have lagged the production-function implication, though recent "value-up" governance reforms are narrowing it. Central estimate splits the difference at ~4.7% (Mode B), band 3.6-5.5%, with the upper end capturing reform upside. (DMS Korea equity history is shorter than the 125-year markets; treated as literature-grounded.)
4. Engine values
Currency ₩. M^T share 30.3%. Defaults: M2 ₩4,472T, GDP ₩2,560T, pop 51.6M, market cap ₩3,830T. Realizable band 3.6 / 4.7 / 5.5 / 5.9 / 7.3. Mode B return 4.7%.
5. Audit checklist
- [ ] Recompute M^T/M2 on the securities-EXCLUDED M2 (BoK new series from Nov 2025) for comparability
- [ ] Confirm M1 and M2 at a common date
- [ ] Confirm market cap (KOSPI+KOSDAQ) and GDP at stated dates
- [ ] Return: pin to a Korea equity-return series; revisit upward if value-up reforms hold
Sweden
Sweden is a monetary sovereign (Riksbank issues the krona), a standard unilateral calibration. Like Australia, both return paths point above-average, and Sweden has one of the best-performing equity markets in the world historically.
Status: macro block primary-sourced (Riksbank, Statistics Sweden, OECD).
1. Macro parameters (engine units: SEK trillions)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M3 | SEK 5.16 T | Feb 2026 | Sveriges Riksbank |
| Transaction-active M1 | SEK 4.10 T | Sep 2025 | Statistics Sweden / Riksbank |
| M^T / M3 ratio | ≈ 79.5% | - | constructed, the HIGH end of the set |
| Nominal GDP | ≈ SEK 6.65 T | 2024-25 | Statistics Sweden (~US$610bn) |
| Real trend growth g | ≈ 1.9% | 2026 | EU Commission / Riksbank |
| Population | 10.6 M | 2025 | Statistics Sweden |
| Equity market cap | ≈ 194% of GDP ≈ SEK 12.9 T | end-2025 | OECD / Nasdaq Stockholm |
| Government debt | ≈ 35% of GDP | 2025 | low; EU Commission |
Sweden's M^T/M3 (~79.5%) is the highest in the set; Swedish M1 is a large share of broad money. Its equity market is unusually deep for its size (highest number of listed companies in the EU, strong equity culture via ISK accounts and funded pensions).
2. Transaction-active share (M^T / M3)
M^T (Sweden) = M1 = SEK 4.10 T
M3 = SEK 5.16 T
M^T / M3 = 79.5%
3. Realizable return: both paths point high
Swedish labour share ~0.58 → alpha ≈ 0.42 → production-function baseline 9.0% → ~5.75% realizable. DMS Sweden real equity is ~6.0% (among the strongest developed markets; the SIXRX has outperformed the S&P 500 and STOXX 600 since 2002 per the OECD). Both paths point above-average, so the central realizable is set at 5.2% (Mode B), band 4.0-6.0%, below the levered equity, consistent ordering. Sweden is a high-return calibration, like Australia.
4. Engine values
Currency SEK. M^T share 79.5%. Defaults: M3 SEK 5.16T, GDP SEK 6.65T, pop 10.6M, market cap SEK 12.9T. Realizable band 4.0 / 5.2 / 6.0 / 6.5 / 8.1. Mode B return 5.2%.
5. Audit checklist
- [ ] Confirm M1 and M3 at a common date from the Riksbank / SCB Financial Market Statistics
- [ ] Confirm nominal GDP in SEK (SCB) at a stated date; keep market-cap ratio consistent
- [ ] Return: DMS Sweden equity figure pinned to the printed DMS country page (~6.0%)
Switzerland
Switzerland is a monetary sovereign (SNB issues the franc), a standard unilateral calibration. Distinctive features: the highest equity-market-cap-to-GDP ratio in the set (~201%), a very strong currency, a zero policy rate (post negative-rate era), and very low public debt.
Status: macro block primary-sourced (SNB, SECO, SIX Swiss Exchange, FSO, IMF).
1. Macro parameters (engine units: CHF trillions)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M3 | CHF 1.211 T | Dec 2025 | Swiss National Bank |
| Transaction-active M1 | CHF 0.766 T | Apr 2026 | SNB (currency + sight deposits) |
| M^T / M3 ratio | ≈ 63.3% | - | constructed (see §2) |
| Nominal GDP | ≈ CHF 0.80 T | 2025 | SECO (~US$0.9T nominal) |
| Real trend growth g | ≈ 1.3% | 2025 | SECO / SNB |
| Population | 9.0 M | 2025 | Federal Statistical Office |
| Equity market cap (SIX) | ≈ 201% of GDP ≈ CHF 1.61 T | Dec 2025 | SIX Swiss Exchange / CEIC |
| Government debt | ≈ 30% of GDP | 2025 | very low (debt brake); AAA-rated |
Note: Switzerland's market cap is dominated by a few global giants (Nestlé, Roche, Novartis), so the ~201% ratio partly reflects that these multinationals are large relative to the small domestic economy. Genuine, but worth remembering when comparing to bank-based economies.
2. Transaction-active share (M^T / M3)
M^T (Switzerland) = M1 = CHF 0.766 T (currency + sight deposits)
M3 = CHF 1.211 T
M^T / M3 = 63.3%
In line with the UK/Eurozone/Japan cluster (63-70%); comfortably above the US.
3. Realizable return: both paths moderate and agreeing
Swiss labour share ~0.62 → alpha ≈ 0.38 → production-function baseline 7.67% → ~4.90% realizable. DMS Swiss real equity is ~4.4% (1900-2024): solid, defensive, low-volatility, with the strong franc a drag on nominal returns but real returns respectable. Both paths land in the mid-4s, so the central realizable is set at 4.6% (Mode B), band 3.5-5.3%, squarely between the two. A defensible, low-drama calibration.
4. Engine values
Currency CHF. M^T share 63.3%. Defaults: M3 CHF 1.211T, GDP CHF 0.80T, pop 9.0M, market cap CHF 1.61T. Realizable band 3.5 / 4.6 / 5.3 / 5.8 / 7.1. Mode B return 4.6%.
5. Audit checklist
- [ ] Confirm M1 and M3 at a common date from the SNB data portal (monetary aggregates cube)
- [ ] Confirm nominal GDP in CHF (SECO) at a stated date; keep market-cap ratio internally consistent
- [ ] Confirm SIX total market cap / GDP ratio at a stated date
- [ ] Return: DMS Switzerland equity figure pinned to the printed DMS country page (~4.4%)
Turkey
Turkey is a monetary sovereign (the TCMB issues the lira), a standard unilateral calibration mechanically. It is the most cautionary emerging-market fit in the set, and deliberately included for that reason: a high-inflation regime (CPI ~31%, down from a peak of ~86% in 2022) with a history of severe lira depreciation. This makes Turkey a revealing stress case for a money-quantity framework, precisely the kind of economy the design is meant to discipline, but it also means the realizable-return estimate must be handled with the heaviest caution in the set.
Status: macro block primary-sourced (TCMB, TurkStat, Borsa Istanbul). Inflation regime flagged as the dominant caveat (§3).
1. Macro parameters (engine units: ₺ trillion)
| Parameter | Value | Reference | Source |
|---|---|---|---|
| Broad money M2 | ≈ ₺26.4 T | early 2026 | TCMB (monthly money & banking statistics) |
| Transaction-active M1 | ≈ ₺10.6 T | Jan 2026 | TCMB (currency + demand deposits) |
| M^T / M2 ratio | ≈ 40% | - | constructed (see §2), M1/M2 ≈ 10.6/26.4 |
| Nominal GDP | ≈ ₺68 T | 2025 | TurkStat (~US$1.35T) |
| Real trend growth g | ≈ 3.2% | 2024-25 | TurkStat / World Bank (solid real growth) |
| Population | ≈ 86.1 M | Dec 2025 | TurkStat (86,092,168; growth ~0.5%) |
| Equity market cap | ≈ ₺20.5 T ≈ 30% of GDP | 2024-25 | Borsa Istanbul / CEIC (shallow, EM) |
| Inflation | ~31% | early 2026 | TurkStat (down from ~86% peak in 2022; disinflating) |
Turkey combines solid real growth (~3.2%) with very high inflation (~31%) and a policy rate above 40%, an unusual pairing. The nominal figures move fast: broad money and GDP both roughly double on a multi-year horizon in nominal terms, so any snapshot must be read at its stated date. The lira has depreciated dramatically over the past decade, which is the central fact behind the return treatment in §3.
2. Transaction-active share (M^T / M2): low, and why
The TCMB's M1 = currency in circulation + demand deposits, the transaction-active measure. M2 = M1 + time deposits + money-market funds.
M^T (Turkey) = M1 ≈ ₺10.6 T
M2 ≈ ₺26.4 T
M^T / M2 ≈ 40%
At ~40%, Turkey's transaction-active share is the low end of the set (developed set 50-80%; India and Korea ~28-30%; Mexico ~50%). This is a direct consequence of the high-rate environment: with time-deposit rates above 50%, households and firms hold an unusually large share of money in interest-bearing term deposits rather than in transaction balances. The low ratio is economically meaningful, not a data artifact, it is what a high-inflation, high-rate regime does to money composition, and it is exactly the kind of distortion the framework's transaction-active anchor is designed to measure.
3. Realizable return: two paths that diverge sharply (heaviest EM caution)
Path 1: Production function
Turkey's labour share is ~0.55 → alpha ≈ 0.45, with a capital-output ratio ~2.8 → production-function baseline ~7.0% → ~4.5% realizable on the production side alone. On paper this looks like a healthy mid-set figure.
Path 2: Historical realised returns
Here the picture changes completely. Turkish equity has produced strong nominal returns but poor real and USD returns: the lira's sustained depreciation has eroded most of the nominal gains for any investor measuring in constant purchasing power or dollars. Long-run real returns have been low and extraordinarily volatile, among the weakest risk-adjusted records of any sizeable market. The shallow market (~30% of GDP) and the ongoing 31% inflation compound the caution.
Resolution: weight the realized history heavily
Turkey's two paths diverge more sharply than any other country in the set: the production function says ~4.5% but the realized real/USD history says materially less, with severe volatility. Anchoring on the production-function figure would ignore precisely the currency and inflation risk that defines the Turkish experience. The central realizable is therefore set at the low end, 4.0% (Mode B), band 3.0-5.2%, close to the realized-history path, with the production-function figure retained only as the top of the band. This is the honest call, and the divergence itself is the finding: for an economy with Turkey's inflation and currency record, the realized history must dominate a favourable production estimate.
4. Broad citizen ownership under Mode Ω
Running Turkey in Mode Ω produces a citizen market-ownership share elevated relative to the US, for the same structural reason as the other shallow-market EMs: a small equity market (~30% of GDP) means the structural-buyer flow is large relative to market size, pushing the ownership ceiling up. Turkey's solid growth (g ~3.2%) enlarges the growth-funded budget somewhat, working in the same direction.
The ceiling is set by the flow-to-growth ratio c / g, reported as the true output of the design rather than tuned to a target. The honest framing holds: in shallower markets citizens can end up owning a larger share than the US ~10%, and Turkey's ~30%-of-GDP market is one of those cases. The heavy caveat here is not on the ownership arithmetic but on the return band feeding it, which is deliberately conservative for the reasons in §3.
5. Engine values
Currency ₺. M^T share 40%. Defaults: M2 ₺26.4T, GDP ₺68T, pop 86.1M, market cap ₺20.5T. Real growth 3.2%, pop growth 0.5%. Realizable band 3.0 / 4.0 / 5.2 / 6.3 / 6.3. Mode B return 4.0%.
6. Audit checklist
- [ ] Confirm M1 and M2 at a common date from the TCMB money & banking statistics (fast-moving nominal figures)
- [ ] Confirm nominal GDP to the printed TurkStat figure (annual, current prices)
- [ ] Confirm Borsa Istanbul domestic market cap at a stated date (the ~30%-of-GDP ratio feeds §4)
- [ ] Return: the 4.0% central is a deliberate weighting toward realized real/USD equity history over the production-function figure (~4.5%); pin to a Turkish equity real-return series in constant terms
- [ ] Inflation regime: re-confirm current CPI; the ~40% M^T/M2 share tracks the high-rate environment and will shift as rates normalize
United Kingdom
Purpose. Re-parameterise the CS engine to the United Kingdom using primary-source data, to the same standard as the US calibration in the papers. Every figure below traces to a named primary source. Two parameters require construction rather than direct citation (the transaction-active money share M^T, and the realizable return); both constructions are shown in full, and the one genuine methodological choice (the capital-output construct) is stated openly rather than hidden in a point estimate.
Status: macro block complete and primary-sourced. Realizable return re-estimated by two independent paths and cross-checked against the canonical UK return series (DMS). For audit before wiring into the engine.
1. Macro parameters (all primary-sourced)
| Parameter | UK value | Reference date | Primary source |
|---|---|---|---|
| Broad money M4 | £3,272 bn | Apr 2026 | Bank of England, M4 series (Bankstats) |
| Transaction-active money M^T (= M1) | £2,280 bn | Dec 2024 | Bank of England, M1 (notes & coin + non-interest-bearing deposits + interest-bearing sight deposits) |
| M^T / M4 ratio | ≈ 69.7% | - | constructed (see §2) |
| Nominal GDP | £3,037 bn | 2025 | ONS, via House of Commons Library |
| Real trend growth g | ≈ 1.1-1.3% | 2025 / OBR fwd | ONS; OBR Economic & Fiscal Outlook |
| Population | 69.49 m | mid-2025 | ONS, provisional mid-2025 estimate (accredited official statistic) |
| Equity market cap (domestic) | ≈ 97% of GDP ≈ £2,958 bn | Dec 2025 | LSE market cap ÷ ONS GDP (CEIC construction); domestically-listed only |
| Government debt PSND ex | ≈ 95-96% of GDP | 2025 | ONS, Public Sector Finances |
| Notes in circulation | £91.5 bn | Feb 2025 | Bank of England, Banknote Statistics |
Notes: - M^T and M4 are at different reference dates (Dec 2024 vs Apr 2026); before wiring in, both should be pulled at a common date from the BoE Database (M4 headline series; M1/M2 in Bankstats Tables A2.2.1 / A2.3). The ratio is stable month-to-month, so ~69.7% is robust, but same-date figures are preferred for the published note. - Market cap uses the domestically-listed basis (matches the US market-cap construct in the engine), not the total-LSE figure (which includes large foreign listings ≈ £4.5T).
2. Construction of the transaction-active share (M^T / M4)
The US calibration (Paper 10) separates transaction-active money (M^T) from broad money and finds M^T/M2 = 51.35%. The UK equivalent is built from the Bank of England's own published aggregate definitions, which draw the transaction boundary explicitly:
M1 = notes & coin held by the private sector + non-interest-bearing deposits + interest-bearing sight deposits. Sight deposits are those "accessible without penalty, either on demand or by close of business on the day following." Time deposits are "all other deposits.", Bank of England, Statistics FAQ.
This is the same economic distinction M^T captures: money available for transactions (penalty-free, on-demand) versus money held as a store of value (time/notice deposits). The BoE boundary is arguably cleaner than a constructed cut because it is defined by the economic property itself (penalty-free on-demand access).
M^T (UK) = M1 = £2,280 bn
M4 = £3,272 bn
M^T / M4 = 69.7%
Finding (flagged for honesty): the UK transaction-active share (~70%) is materially higher than the US M^T/M2 share (51.35%). This is real, not an artefact: UK M4 and US M2 are bounded differently, and UK sight deposits are a larger fraction of broad money. It means the UK price-stability locus differs from the US one and must be recomputed with the UK ratio, the US 51.35% must NOT be imported.
Optional refinement: the BoE also publishes a Divisia money index that weights each M4 component by its transaction-service content (Barnett aggregation). A Divisia-weighted M^T could be used as a robustness cross-check on the 69.7% sight-deposit cut; both are defensible, and they should agree closely.
3. Realizable return (deeper re-estimation: two independent paths, triangulated)
The return is the least mechanical parameter, so it is derived two independent ways and cross-checked, rather than asserted from one stylised assumption.
Path 1: Production function (matched to Paper 5's Solow construct)
Paper 5's US baseline is r0 = alpha/(K/Y) - delta = 0.35/3.0 - 0.05 = 6.67%. The K/Y = 3.0
is a standard mid-range Solow calibration (textbook values span ~2.5 (Mankiw) to ~4.3
(Golden Rule); 3.0 is a defensible convention, not a hard US measurement). The only
cleanly-sourced UK structural parameter that genuinely differs is the capital share:
- UK labour share ≈ 0.63 (ONS; Caswell 2024) ⇒ alpha_UK ≈ 0.37.
Holding the K/Y construct matched to Paper 5 (3.0) and changing only alpha:
r0(UK) = 0.37/3.0 - 0.05 = 7.33% (UK no-program baseline; US 6.67%)
This is the GROSS marginal product of total productive capital, before program attenuation.
Path 2: Historical realised returns (independent of the production function)
Cross-check against the Dimson-Marsh-Staunton (DMS) database, the canonical long-run return dataset (UBS/Cambridge/LBS Global Investment Returns Yearbook 2025, 125 years):
- UK real equity return, 1900-2024: ≈ 5.3% real (DMS)
- World real equity, 125yr: 5.2%; world 2000-2024: 3.5% (lower-return era)
Reconciliation (the validation)
The two paths measure related but distinct objects and should NOT be equal: - Path 1 (7.33%) is the aggregate marginal product of total capital (broad base). - Path 2 (5.3%) is the realised return to listed equity (a levered claim on a subset).
The floor return the engine uses is the attenuated return (Paper 5 compresses the US 6.67% baseline to 4.26% in Mode B via the r→g mechanism). Applying the same attenuation ratio to the UK:
UK: 7.33% baseline -> ~4.68% realizable (Mode B)
4.68% sits just below the 5.3% UK historical equity return, exactly the expected relationship, since the realizable floor is a broad, attenuated claim that should earn slightly less than levered listed equity. The same reconciliation holds for the US in Paper 5 (6.67% → 4.26% realizable, against US historical equity ~6.5% real), so the UK is treated on identical footing.
Conclusion: the two independent paths converge on a consistent, economically sensible relationship. UK realizable return (Mode B) ≈ 4.68%, baseline ≈ 7.33%. This is no longer a single-assumption estimate with a caveat, it is triangulated and cross-checked against the canonical UK return series. Residual sensitivity remains in the K/Y convention (shared with Paper 5's US figure), so a band of roughly 4.3-5.0% realizable is appropriate, matching the style of Paper 5's own reported band.
4. What changes in the engine (UK vs US)
| Engine input | US | UK |
|---|---|---|
| Currency symbol | $ | £ |
| Broad money | $22.4T (M2) | £3.27T (M4) |
| M^T share of broad money | 51.35% | 69.7% |
| GDP | $30.8T | £3.04T |
| Population | 342M | 69.5M |
| Market cap | $69T (~2.2× GDP) | £2.96T (~0.97× GDP) |
| Real growth (default) | 2.0% | 1.2% |
| Realizable return (Mode B) | 4.26% | 4.68% (triangulated, band 4.3-5.0%) |
| Baseline return r0 | 6.67% | 7.33% (α-adjusted, K/Y matched) |
| Govt debt (context) | ~102% | ~95% |
The price-stability locus, floors, and dividends all recompute from these; none of the US structural ratios are imported. The M^T share and market-cap/GDP ratio are the two inputs that differ most and will move the UK outputs materially away from a "US model in pounds."
5. Audit checklist (for sign-off before wiring in)
- [ ] M4 and M^T pulled at a common reference date from BoE Database
- [ ] Market cap confirmed on domestically-listed basis at a stated date
- [x] Return: DONE, triangulated via production function (7.33% baseline / 4.68% realizable) AND cross-checked against DMS UK historical equity (5.3%); band 4.3-5.0%
- [ ] Divisia cross-check on the 69.7% M^T share (optional robustness)
- [ ] Confirm growth default (1.2% trend vs a forward OBR figure)