What is an asset backed security?

An "asset-backed security" is sometimes used as an umbrella term for a type of security backed by a pool of assets, and sometimes for a particular type of that security – one backed by consumer loans or loans, leases or receivables other than real estate.

Are asset-backed currencies a good investment?

For a country that may be rich in assets but with a low-value national currency, asset-backed currencies offer enormous potential. One of the most well-cited examples to date comes from Venezuela, which issued the Petro, an oil-backed currency that was supposed to help the country out of its economic woes.

What is a backed currency?

A backed currency is one that a commodity backs or supports, namely a precious metal like silver or gold. The value of that currency has a direct correspondence with the commodity’s value. Even if that currency is not redeemable in that commodity on demand, there is still a correspondence in value.

Do Global Markets dictate the value of asset-backed currencies?

Global markets dictate the worth of asset-backed currencies, regardless of the political climate in the country or region. For a country that may be rich in assets but with a low-value national currency, asset-backed currencies offer enormous potential.