An important contribution to the rapid U.S. government ascension to a world power status after WW II is its monetary dominance by way of the Bretton Woods UN conference during end of the war. The conference’s acceptance of the dollar/gold exchange standard was pushed forward through the political might of the US though the Keynesian plan, also supported by the Canadian delegation, held a far greater promise for global reconstruction and prosperity.
The U.S. government could loose its financial predominance if it is unable to resolve its debt ceiling conflict. It would become one nation among others that would have to compete notwithstanding its deep financial structure with a plethora of good (and dangerous) financial services. Thus, more instability would emerge in international monetary system that already is unstable and rudderless.
One way to counteract the global impacts of such financial crisis—they are more devastating than the domestic impacts—is for the U.S. government and other stakeholder to start negotiating towards a new international monetary system with an international transaction currency not bound to the US financial system or to a regional financial system such as the Euro. Time would seem to be ripe to again raise the issue of Special Drawing Rights (SDR), the basket of currencies that would replace the U.S. dollar as transactional currency. This reform would greatly improve monetary, financial, economic and commercial systems because the monetary system, like glue, binds those systems together.
It is during this time of negotiation and debate of a just, sustainable, and therefore, stable international monetary system that stakeholders in the global North and South consider the feasibility of developing a monetary standard upon which national or regional currencies can be pegged. The 2012 book The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation presents the case of taking a very specific tonnage of CO2e per person as the monetary standard by discussing the conceptual, ethical, institutional and strategic dimensions of such carbon-based international monetary system. This carbon standard would not only transform the international monetary system and lead to a just, sustainable, and, therefore, stable system but would also combat this century’s greatest challenge of climate change and advance low carbon and climate-resilient development in both the global North and South.