Indexed units of account: theory and assessment of historical experience
An indexed unit of account, such as the Unidad de Fomento (UF) in Chile, is a money analogue that can be used to price items for sale or to specify Amounts to be repaid in the future. While it is in a sense a sort of money, it is not true money since it is not a medium of exchange and it has no physical embodiment like coins, notes, or reserve balances. An exchange rate between the unit and the true money or legal tender (in Chile, the peso) is defined using an index number (such as the consumer price index), and payments are executed in money. Indexed units of account thus facilitate payments that are tied to the index number, without being a means of payment.