World Currencies for Sustainability

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Abstract

The 2007-9 global financial crisis, the post-2009 Eurozone debt crisis, and growing inequality are reasons to critique the world financial system. More disconcerting are scientific findings that civilisation’s impacts on the environment are approaching ‘planetary boundaries’ (Steffen et al., 2015) such as catastrophic climate change and ocean acidification. This paper presents a proposal for Complementary Currencies for Climate Change (4C) and it’s associated mitigation policy, called Global 4C Mitigation (G4CM), with the specific aim of achieving strong mitigation of climate change and improved economic conditions (Chen & Cloud, 2014). 4C is a market-and-monetary instrument that will complement the international financial architecture to help correct the existing market failure in environmental externalities associated with greenhouse gases (Stern, 2007). The unit of account of 4C is 100 kg CO2-e verifiably mitigated, and this unit of account is unique in terms of official money because it is based on services rather than commodities or fiat banking. 4C issuance will be administratively coupled to mitigation services, and 4C issuance will be delivered globally as proportional subsidies for the de-carbonisation of industrial and power installations, and as proportional rewards for carbon sequestration. We call this incentive mechanism Globalised Payments for Ecosystem Services (GPES) and it will be implemented under the Beneficiary Pays Principle (BPP). The G4CM policy prescribes multi-decade 4C floor price schedules. To establish these floor prices, an international monetary protocol will be used to transfer purchasing power from a comprehensive basket of fiat currencies into 4C. This monetary approach will create a concomitant rate of inflation in the fiat basket, and it is hypothesised that this cost spreading will minimise political delay over the long run. Co-benefits will include new currencies for international trade, price signals that complement carbon taxes, stimulus for sustainable projects and employment, ecosystem protection, and improved social cohesion. The proposed 4C world currency is a new type of official money that creates a price benchmark for climate stability. We give 4C a new monetary classification: the World Service Currency (WSC). The 4C world service currency is advocated on the basis that it can mitigate greenhouse gas emissions to the maximum amount using market forces and a new political pathway. Nations are invited to participate in a 4C system for mutual protection by ceding some fiscal sovereignty and monetary autonomy to the G4CM protocol. The political pathway to an agreement may begin with field trials using digital currencies, followed by contingency planning and negotiations.

Delton B. Chen Ph.D, deltonchen@engineer.com, Lead Author, Global 4C Project, Center for Regenerative Community Solutions, NJ, USA
Joel van der Beek M.E.,jb@econovision.nl, Principal Economist, EconoVision, The Netherlands, Board of Economists for Peace and Security.
Jonathan Cloud, jcloud@crcsolutions.org, Executive Director, Center for Regenerative Community Solutions, NJ, USA
Hailong Jin Ph.D., cigijin@hotmail.com,Research Consultant, Centre for International Governance Innovation, Canada
Armonia Borrego Ph.D.,armoniab@gmail.com,Lecturer of Economics, National Autonomous University of Mexico, Mexico


Keywords: , , , , , ,

13 responses

  • pasbaxo says:

    World currencies could create compliance of capital in another exchange system on national base
    to prevent international commotion as result of existing inequalities in present liquidities and goods.
    Each national currency to be divided by two on base of NCB activa + passiva total amount to create two parts, the first to be divided by 100 and the second to be multiplied by 100. Results to be created by addition of both resulting amounts and transformed by electronic banknotes muliplication , to be placed on deposito to valuate the total amount by moving it with the moving of Central Banks’ interest foot .

  • pasbaxo says:

    P.S. to above placed explication : the system stays fictive untill electronic multiplication of banknotes is to the order (after computation of division and multiplication). Only legalization and application by articles of the own monetary system is necessary. IMF is only a Fund to deliver loans and permit aquisition of borrowings.

  • Delton says:

    Dear pasbaxo,

    Thank you for your comment, but unfortunately I don’t fully understand. If you would like to elaborate here, or email me at deltonchen@engineer.com. Can you clarify your statement: “NCB activa + passiva total amount to create two parts, the first to be divided by 100 and the second to be multiplied by 100”.

    My colleague agrees that special drawing rights (SWR) of the IMF cannot be treated as an ideal international currency.
    In our proposal, we assume that central banks would purchase the new world currency (possibly with fiat created through quantitative easing) and the keep it in reserve, and this is to raise the market price of the new world currency to the level required to achieve sufficient mitigation. We do not intend the new world currency to remain fictive – it would be used as a world trade – anywhere and everywhere.

    The current international monetary system could be reformed to enhance international cooperation and surveillance, and why not use this approach? The monetary policy framework would be comparable to other endeavours of climate mitigation, such as EU carbon taxes, US EPA biofuel quota and WB green bonds.

    Thanks, Delton

    • pasbaxo says:

      A new world currency as accepted by all participants would be loaded with the same mass of debts
      and herefore could not function better, left a better exchange flexibility. The monetary QE system proposed by me is an attempt to collect more liquidities to fill a concerned currency legally as part of the concerned monetary system. The process stays fictive untill the results are computed and the costs are abstracted.
      Two equal parts of the total amount incl. debts of the Monetary Central Bank are placed against eachother, the first part of which the currency should be devaluated by dividing 1 through 100 and the second part of which the currency should be revaluated by multiplying by 1 with 100, as consequence the first amount-part to be divided by 100 and the second amount-part to be multiplied with 100.
      The total of revenues should be subjected to a realizing electronic multiplication process.
      The SDR could function as a world currency, but recognition problems to exchange at banks and
      lack of obligation to receive, and unclear verbalization of purpose served as reasons to eliminate the QE function. It degraded again in a means to collect contribution parts from members states IMF. The new President cq new policy is only based on lending/borrowing and seems not able not solve debts-problems. Moreover the IMF is not a monetary union but a fund and as such not able to take essential
      monetary decisions.
      Bonds and obligations and other debt- packaging materials could not function as debt relievers, as history already proved. Last ressort obligations demand back-paying of delivered values and new package methods could not solve the same problem. Quick working speculaive means as futures could,
      but the risks are considerably and emittants should pay their own debts. A currency movement system self composed and dominated by the concerned monetary union, could restrict the dangers of speculation to zero by confronting two parts of the same currency to each other , evitating in first instance confrontation with other currencies. Eliminating membership of IMF could ease the process,
      A world one-currency system would not encounter such problems but attempts to foundation could encounter them beforehand. The system demands compensation criteria to determine heights of QE
      amounts , f.i. by means of PPP criteria complied by a freight weight measure, governments’s and
      production tax heights a.s.o., in order to equalize the comparance base. A world system, f.i. ruled by he
      World Bank, would give the World Bank much hindering authority , whereas a world consent to all existing monetary unions to multiply banknotes electronically in self chosen amount heights would not not even be necessary.

      • Timwill says:

        I think Pasbaxo’s base argument “A new world currency as accepted by all participants would be loaded with the SAME mass of debts” is problematic. How can they be the SAME? The truth is that our current monetary system is not fair and we are depriving our future generations of the living right.

  • pasbaxo says:

    Conserved CO2-wastes, if bonificated by exchangeable currency, could result in an epidemical
    movement of collectors, creating artficially large quantities of CO2. f.i. by pyromanic behaviour.
    Reserve currencies, if finally exchangeable, could be applied to many public or economic fields, to serve as liquidities inducer, f.i. to rebalance import-export relations, to eliminate labourlessness, to relieve public and private debts, to capitalize production companies and governments evitating debt. Exchange in normal accepted currencies could be delayed untill control on accounts and goods is executed.

    • Timwill says:

      It’s not clear whether you are intending to defend or suggesting to reform the current monetary system. I think if you are choosing the first option, just say it and provide your supporting materials in a separate link. Your supporting materials here cannot exceed those in the paper.

  • Delton Chen says:

    Hello Pasbaxo,

    The administrative rules of the new policy will not encourage ‘pryomanic behaviour’, because they will reward sequestration and subsidise cleaner energy.

    If industrial installations were to artificially raise their emissions, they would incur the costs for the fossil fuels and associated carbon taxes, and may be breaking (new) laws that may even be supported by currency counterfeiting laws. The data provided by polluting industry will become public domain, and so it is unlikely that firms will burn excessive fuels in pyromanic behaviour – given a potential social backlash and bad publicity. Administrative conditions can be designed with a lead in period that monitors emissions prior the first assessment period to prevent pyromanic behavior. Many industries already report their emissions for tax purposes. Once the firm’s emissions pattern is established, the firm will be incentivised to reduce their average emissions over time.

    The world currency mechanism will internalise the costs of greenhouse mitigation and incentivise market-based solutions. This is its key purpose.

  • Delton Chen says:

    P.S. There will always be bad actors who will try to game the system and other problems – such as defaults. The policy task is to overcome these ‘negatives’ with sound administrative rules, verification and public oversight. The issue of defaults are covered in the paper.

  • Delton Chen says:

    Hello Pasbaxo,

    The administrative rules of the new policy are designed to avoid ‘pryomanic behaviour’. This is not a major problem for sequestration rewards and subsidies for cleaner energy. Decarbonising industry is where the pyromanic behaviour is relevant, and this is prevented with administrative rules.

    If industrial installations were to artificially raise their emissions, they would incur the costs for the fossil fuels and associated carbon taxes, and they may be breaking (new) laws – laws that may even include currency counterfeiting laws that would be regarded as a criminal offence. The data provided by polluting industry will become public domain, and so it is unlikely that firms will just burn excessive fuels in pyromanic behaviour – given the social backlash, bad publicity, criminal actions, and taxes. Administrative conditions can be designed with a lead in period that monitors emissions prior the first assessment period to verify the existing emissions pattern. Many industries already report their emissions for tax purposes. Once the firm’s emissions pattern is established, the firm will be incentivised to reduce their average emissions over time – so there is no future incentive to raise pollution levels after starting the scheme.

    The world currency mechanism will internalise the costs of greenhouse mitigation and incentivise market-based solutions. This is its key purpose.

  • pasbaxo says:

    To Timwill: The same mass of debts could be reached theoretically in order to recount the GDP per capita creating a new rangorder ; compensated GDP as criterium (under other criteria) on base of which debts relievance rates to production companies could be computed to be delivered in debtless liquidities. Another criterium could be bottom fertility degree. More favourablle circumstances could deliver less right on relievance in free liquidities, placing de GDP on a relatively lower level. The compensation rates as base to decide compensation of debt relievance rates or amounts are of course arbitrarily: A high degree of natural resources paired with a low GDP could not demand the same compensation to debt relievance as a low degree of natural resources paired with a high GDP, left other criteria. Finally the debt relievance computation would deliver real debtless amounts to be created by Central Banks on base of monetary articles . The one currency approach should be considered in the same way, delivering compensation amounts to debts on base of relevant criteria (GDP, natural resources, number of population, development of advanced technology ) to redempt weighted debts before accessing to the world mono-currency.

  • pasbaxo says:

    GDP PPP is a fictive concept whereas it delivers a new GDP achievement order, but the debts could not be payed directly as consequence of this new ranking. It could be served as central system delivering ranks which would be permitted to claim a sum of backless liquidities to pay debts, f.i. ruled by IMF. If no consensus reachable , free liquidities suppliance organized by seperate monetary unions could be
    permitted .