Create an interactive system...
About this model
Create an interactive system simulation of a stablecoin reserve stress testing framework with the following architecture: NODES AND FLOWS: Create the following resource pools: • Backing Pool (main reservoir): starts at 100 units representing £100M GBPM in circulation. Labelled “Gilt Portfolio + Cash Reserve” • ILAR Buffer: starts at a separately calibrated buffer amount, labelled “Illiquid Asset Reserve” • Redemption Queue: starts at 0, receives inflow from triggered redemption events • Cure Pool: represents issuer own funds available for T+1 cure, starts at a defined capital amount SIMULATION INPUTS (make these adjustable sliders): • Net redemption flow rate: default 2% of supply per day, adjustable 0–40% • Gilt price volatility: default ±1.5% daily, adjustable 0–15% • Stress overlay multiplier: default 1x, adjustable 1x–5x (representing the parameterised stress overlays applied multiplicatively) • Correlation coefficient between redemption pressure and gilt price fall: default 0.6, adjustable 0–1.0 • Cash share of backing pool: default 30% at launch, adjustable 15–100% • Simulation horizon: adjustable 1–30 days MONTE CARLO ENGINE: Run 1,000 simulation paths simultaneously. Each path should independently sample: • Daily redemption draws from a right-skewed distribution (representing fat-tail redemption behaviour) • Daily gilt price movement from a normal distribution modified by the volatility surface input • Co-movement governed by the correlation coefficient (so high correlation = redemptions spike when gilts fall simultaneously) Apply the stress overlay multiplier to both inputs simultaneously to simulate combined stress scenarios. OUTPUT METRICS TO DISPLAY: Show live updating distributions of: • Peak liquidity required across all paths (highlight 95th, 99th, 99.5th percentile lines) • Gilt liquidation velocity required (units per day) — flag if this exceeds a “market absorption” threshold • Time-to-cure distribution — highlight any paths where cure cannot be completed within T+1 (next business day) • ILAR adequacy: show what percentage of paths the current ILAR buffer successfully absorbs versus paths where it is breached SCENARIOS — build four named preset buttons: 1. Launch / Normal: 30% cash, 2% daily redemption rate, 1x stress overlay, 0.3 correlation 2. Market-Wide Stress: 30% cash, 8% redemption rate, 2.5x overlay, 0.8 correlation — represents broad digital asset sell-off plus gilt market liquidity haircut 3. Mass Redemption (Idiosyncratic): 30% cash, 25% redemption rate, 2x overlay, 0.4 correlation — represents a Monee-specific confidence event 4. Weekend / Low Liquidity: 30% cash, 5% redemption rate, 1.5x overlay, 0.6 correlation — gilt liquidation is unavailable, cash pool is the only cure mechanism; flag any path where cash is exhausted before Monday open VISUAL LAYOUT: • Left panel: input sliders and scenario preset buttons • Centre: live flow diagram showing Backing Pool → Redemption Queue → Cure pathway, with ILAR sitting as a buffer between the Backing Pool and a “Shortfall” node • Right panel: output distribution charts with the 95th / 99th / 99.5th percentile lines marked in distinct colours • Bottom bar: live readout of three headline numbers — (1) % of paths where ILAR holds, (2) worst-case time-to-cure in days, (3) maximum gilt liquidation velocity required NARRATIVE ANNOTATIONS: Add tooltip annotations on each node explaining its regulatory purpose in plain language, referencing CP25/14 and CP25/15 where relevant. For example: the ILAR node tooltip should read “Sized to absorb backing-pool valuation shortfalls under CP25/15. Must enable T+1 cure at the 99th percentile stress outcome.” TONE AND PURPOSE: This is a regulatory demonstration tool, not a trading model. Visual style should be clean and institutional. The goal is for an FCA reviewer to be able to adjust a single slider — for example increasing the stress overlay from 1x to 3x — and immediately see how the ILAR buffer performs across the distribution of outcomes, and where the T+1 cure constraint starts to bind.
"Create an interactive system..." is a public Machinations diagram shared in the Community by Georges Alexandar, with 21 components.
It was created in April 2026 and last edited in April 2026.
Open the diagram in the Machinations app and press Play to watch the resources move, adjust its values to test how the system responds, or remix it to make an editable copy in My diagrams.
