Today’s New York Times critically deals with
What can be done about this beggar-thy-neighbor currency policy? Nations such as the
This increasingly conflictual situation shows how poorly the present international monetary system works with its floating exchange rates: one important trade partner refuses to stick to the rules of the “non-system” and the trading world is at edge, particularly in a time of economic distress after the near collapse of the international financial system has passed for the time being.
What is needed is monetary transformation both internationally and nationally. Nations have to start seriously thinking of returning to a fixed exchange rates that are based upon an agreed upon standard. A beginning of this process was made when the UN Stiglitz Commission of June 2008 proposed to move away from a national reserve currency such as the US dollar, euro or yen. It was
Nationally, nations have to reassert themselves and remove the fractional reserve banking privilege from privately-owned banking systems which have to compete using this money creation function. In this transformational process nations are also to separate from these transformed banking utilities their securities dealing which, in the case of the
The TCS system, developed mostly to deal with the monetary dimension of the climate crisis, proposes carbon standard with the Tierra as its international reserve currency. It further proposes that nations after agreeing on a cap, hopefully in
Part of this proposed TCS system is an updated version of the International Clearing Union and its Bancor proposal that John Maynard Keynes brought to the Bretton Woods UN Monetary and Financial Conference of 1944. Besides administering the Tierra reserve system, this Tierra International Clearing Union would also the clearing house of all international financial transactions, thus bringing transparency to the regulation of those flows.
Given that these changes go beyond being reformist because of their transformational nature, present international financial institutions such as the IMF are to evolve into new institutions where some of their resources, but not their present neo-liberalist and privatizing, can be utilized.