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May
30

Atmospheric occupation, carbon debt and the Tierra

Post By gaia1 in Bioregional economics

 

The first time I encountered the phrase ‘atmospheric occupation’ was today when reading Andrew Simms’ Ecological Debt. The Health of the Planet & the Wealth of Nations (Pluto Press 2005). We are all aware of terrestrial occupations during the colonial times and present ones such as the Israeli occupation of the West Bank. They are visible dominations and their social, economic and ecological impacts are measurable.

Atmospheric occupation, on the other hand, is a kind of domination that is less visible, particularly at its origin. It started when coal became the main source of energy in the middle of the 19th century to power the explosive expansion of the railways in Europe and North America. It has been growing when oil was added at the end of 19th century and natural gas a little later. These three fossil fuels are now driving about 80% of all energy sources in the world economy.

It is the industrialized North, constituting about 20% of the world’s population, who is responsible for some 80% of the carbon pollution by the use of these fossil fuels. They are basically occupying the atmosphere and using this global commons without indemnifying the 80% of the world population who suffer the main consequences of this pollution and are constrained in using these nonrenewable energy sources for increasing their standard of life.

This ecological, specifically carbon, indebtedness has to be reversed on ethical, social and economic grounds. It is to be connected with the financial indebtedness of the majority world. Agreement has to be reached between the ecological debtor countries in the global North who are the financial creditors and the ecological creditor countries in the global South who are the financial debtors.

There are many ways to balance both the ecological and financial indebtedness of the global North and South. One of them is to use the proposed new non-national international reserve currency of the Tierra as a major, institutional way to balance both the economic and financial accounts in modified balance of payments. By basing the Tierra on carbon emissions permits and having a UN World Monetary Board administer the new balance of payments we are dealing in an equitable, democratic and sustainable way with the climate crisis. The present allocation of SDRs to developing nations is a way station to this superior setup where the atmospheric occupation by a small group of nations is ended in a negotiated process among equals. The Earth and her atmosphere is a patrimony entrusted to all humans equally. In last instance, the Earth is not owned by humans. She is self-possessed and self-organizing. In religious terms, the Earth is the Lord’s.

 

 

 

May
29

Africa and the Climate Crisis

Post By gaia1 in Tierra Currency

 

An important meeting took place during this last week in May in Nairobi where 300 African negotiators, specialists and CSOs and over 30 African Ministers of Environment attained a major milestone on the road for combating climate change on the continent. The Nairobi Declaration adopted at the Special Session of the African Ministerial Conference on the Environment (AMCEN) On Climate Change arrived at a consensus and highlighted its major challenges and opportunities in the negotiations for amore equitable climate regime.

The Declaration provides African countries with a platform to make a strong
case for support at
Copenhagen in December 2009. This support, particularly from the international community, should be based on the
priorities for
Africa, which include adaptation, capacity-building,
financing and technology development and transfer.

The African Ministers of Environment have agreed to mainstream climate
change adaptation measures into national and regional development plans,
policies and strategies. In doing so, they will aim to ensure adequate adaptation to climate change in the areas of water resources, agriculture, health, infrastructure, biodiversity and ecosystems, forest, urban management, tourism, food and energy security and management of costal and marine resources. [i]

Also during this week the IMF announced that out of its $1.1 trillion fund around $11 billion will go to sub-Saharan African countries in Special Drawing Rights or SDRs. These SDRs can be used to boost their foreign currency reserves and stabilize their currencies, so that currency speculators are unable to cause economic turmoil. These SDRs are particularly helpful as reserves because these countries need not to spend dollars, euros or yens (at very low interest rates) to maintain their foreign exchange reserves and can allocate them for development or climate mitigation and adaptation measures. These SDRs are also particularly welcome given that export income from cotton, copper and oil has fallen drastically on account of the recession in the North and given that investment flows dropped significantly because of greater risks in weakened economies. [ii]

While a strong unified negotiating position for
Copenhagen and the significant allocation of SDRs are promising developments, I suggest that African nations consider adopting the Tierra Solution as an additional major way of financing for both development and climate mitigation and adaptation measures. By emphasizing the connection between ecological and financial indebtedness they become ecological creditors and financial debtors. As ecological creditors they are able to argue for a modified balance of payments where carbon accounts and financial accounts are simultaneously listed and accounted for.  Adopting a carbon-based reserve currency of the Tierra which basically is an ecological IOU would lead to the adoption of this combined balance of payments. Using the cap-and-share approach to allocate carbon emissions permits on an equal basis to the world’s adults and adolescents, people in the global North who are ecological debtors and financial creditors would transfer resources via their carbon account in order to balance it.

 

The question whether the above SDRs are not doing the same for Africa as the proposed Tierra can be answered with a yes and a no. It contributes to the African nations’ reserve positions, but it is done in ad-hoc way by an institution that does not reflect the world’s peoples. Moreover, it is still done in a neo-liberal philosophy of structural adjustments and conditionalities that foster the rich nations. By having a carbon based international reserve currency like the Tierra that is part of a nation’s balance of payments and administered by a UN Monetary Board several of the shortcomings of the SDR arrangement can be overcome.



 

May
27

Monetary transformation in the short and long term

Post By gaia1 in Tierra Currency

 

 

 

The title of book that I have been working on for almost half year called TIMU: The Transformative Approach to Monetarily  Solve the Economic Crisis by Solving the Climate Crisis  has been changed into The Tierra Solution: A Monetary Proposal to Deal with the Ecological and Financial Indebtedness in the Global North and  South. This change in title points to a new focus in the book where monetary transformation is shifted from the long term or ultimate goal of a transformed international monetary system to the  short-term goal of having the carbon-based international reserve currency of the Tierra accepted as a main source of funding for development and mitigation and adaptation measures in the global South. Thus, both countries in the global North and South can settle their ecological and financial accounts by using elements of an international monetary system. This Tierra Solution is based upon the principles of fairness and sustainability. It is fair because the ecological debtor countries in the global North have to settle their debts by transferring resources to ecological creditor countries in the global South. It is sustainable because the Tierra becomes part of the carbon account in a modified balance of payments and thus institutionalized.

 

May
18

Tierra as a transformational road

Post By gaia1 in Transformation versus reform

TWO PARALLEL UNIVERSES AND HUMANITY’S HOPE

May 18, 2009

 

About six months ago during the acute global economic crisis and the ongoing climate crisis I set out with the determination that I as a sustainability sociologist with experience in international relations and development should be able to come up with a plausible direction forward.

 

I think I found that plausible direction in the pursuit of carbon based international reserve currency, called the Tierra. It is a demanding direction that represents a transformational change in the international monetary system.

 

Transitioning from the present national international reserve currencies system of dollars, euros, and yen is being advocating by the UN GA President's Commission on Monetary and Financial Crises and also pushed by China as part of the G20 process. We will see nations changing their nationally-based reserve currencies into Special Drawing Rights (SDRs). However, we need a second transition from these SDRs to Tierras. That transition is transformational and, ipso facto, difficult, demanding, but necessary if we want to resolve the economic crisis through resolving the climate crisis.

 

In his New York Times column “The Perfect, The Good, The Planet of May 18 economist Paul Krugman thinks that “It’s decision time on climate change.”  He supports the Waxman-Markey bill on cap-and-trade, arguing that the pursuit of a perfect bill should not prevent the good of an imperfect bill to emerge. Cap-and-trade is a start and better than a carbon tax. However, the Tierra is a transformational carbon reduction methodology that would provide an institutional mechanism via the carbon account of a nation’s balance of payments to transfer funds from ecological debtor nations in the global North to ecological creditor nations in the global South.

 

Transitioning to the Great Transformation of the Tierra and its Tierra International Monetary Union (TIMU) Architecture is where the two parallel universes and humanity's hope comes in. There is the Questionable Quad universe and the universe of humanity's hope’.

 

The Questionable Quad universe is the universe that is supported by the G8 and, by extension, the G20. This universe is questionable and has to be challenged. In its reformist economic proposals it still is on a road that does not consider the economic and climate crises simultaneously. The universe of humanity's hope, the United Nations, is on a road that starts considering the two crises simultaneously. If the UNFCCC, the UNGA President’s Commission and UNCTAD and other UN organizations were to go for the Tierra and its TIMU Architecture we would have a transformed international monetary system where a World Central Bank would start administering the carbon accounts of the nations and become the instrument for the financing for development and the necessary climate mitigation and adjustment measures.

 

Presently, the Questionable Quad and the UN universes are still parallel universes which, with some minor linkages, are to be brought into the one universe that represents humanity’s hope, i.e. a reformed UN. It is a UN that is able to measure up to the integrated social, economic and environmental vision of the Earth Charter, the value base of the sustainability revolution and its sustainable communities development paradigm. The latter paradigm expresses itself in a bioregional economics approach with frugal trade structures that replaces uncontrolled corporate globalization with its market fundamentalism and privatization philosophy.

 

This Tierra proposal may not seem plausible because it reaches beyond the   general bounds of present thinking on either the economic or climate crises. Start thinking in solving the two crises simultaneously, the proposal becomes more plausible. People are asked to think outside the box, in other words to think transformationally. Here is proposal which may seem far out and it is, because it is not re-formist, but trans-formist or transformational. It does not use the present form; it goes beyond the present form of the international monetary system. It is radical, because it goes to the root of the monetary, financial, economic systems by making a small change with big consequences in the international monetary system which is the glue that binds those three systems together.

 

 Details about the context and constraints, the six components of the TIMU Architecture and the challenges of the global community, the UN and the US are presented in TIMU: The Transformative Approach to Monetarily Solve the Economic Crisis by Solving the Climate Crisis which is to be published at end of the summer of this axial year 2009. For a summary see the various versions of the Tierra Manifesto of 2009 on www.timun.net  

 

May
18

Two parallet universes and humanity's hope

Post By gaia1 in Bioregional economics


 

About six months ago during the acute global economic crisis and the ongoing climate crisis I set out with the determination that I as a sustainability sociologist with experience in international relations and development should be able to come up with a plausible direction forward.

 

I think I found that plausible direction in the pursuit of carbon based international reserve currency, called the Tierra. It is a demanding direction that represents a transformational change in the international monetary system.

 

Transitioning from the present national international reserve currencies system of dollars, euros, and yen is being advocating by the UN GA President's Commission on Monetary and Financial Crises and also pushed by China as part of the G20 process. We will see nations changing their nationally-based reserve currencies into Special Drawing Rights (SDRs). However, we need a second transition from these SDRs to Tierras. That transition is transformational and, ipso facto, difficult, demanding, but necessary if we want to resolve the economic crisis through resolving the climate crisis.

 

In his New York Times column “The Perfect, The Good, The Planet of May 18 economist Paul Krugman thinks that “It’s decision time on climate change.”  He supports the Waxman-Markey bill on cap-and-trade, arguing that the pursuit of a perfect bill should not prevent the good of an imperfect bill to emerge. Cap-and-trade is a start and better than a carbon tax. However, the Tierra is a transformational carbon reduction methodology that would provide an institutional mechanism via the carbon account of a nation’s balance of payments to transfer funds from ecological debtor nations in the global North to ecological creditor nations in the global South.

 

Transitioning to the Great Transformation of the Tierra and its Tierra International Monetary Union (TIMU) Architecture is where the two parallel universes and humanity's hope comes in. There is the Questionable Quad universe and the universe of humanity's hope’.

 

The Questionable Quad universe is the universe that is supported by the G8 and, by extension, the G20. This universe is questionable and has to be challenged. In its reformist economic proposals it still is on a road that does not consider the economic and climate crises simultaneously. The universe of humanity's hope, the United Nations, is on a road that starts considering the two crises simultaneously. If the UNFCCC, the UNGA President’s Commission and UNCTAD and other UN organizations were to go for the Tierra and its TIMU Architecture we would have a transformed international monetary system where a World Central Bank would start administering the carbon accounts of the nations and become the instrument for the financing for development and the necessary climate mitigation and adjustment measures.

 

Presently, the Questionable Quad and the UN universes are still parallel universes which, with some minor linkages, are to be brought into the one universe that represents humanity’s hope, i.e. a reformed UN. It is a UN that is able to measure up to the integrated social, economic and environmental vision of the Earth Charter, the value base of the sustainability revolution and its sustainable communities development paradigm. The latter paradigm expresses itself in a bioregional economics approach with frugal trade structures that replaces uncontrolled corporate globalization with its market fundamentalism and privatization philosophy.

 

This Tierra proposal may not seem plausible because it reaches beyond the   general bounds of present thinking on either the economic or climate crises. Start thinking in solving the two crises simultaneously, the proposal becomes more plausible. People are asked to think outside the box, in other words to think transformationally. Here is proposal which may seem far out and it is, because it is not re-formist, but trans-formist or transformational. It does not use the present form; it goes beyond the present form of the international monetary system. It is radical, because it goes to the root of the monetary, financial, economic systems by making a small change with big consequences in the international monetary system which is the glue that binds those three systems together.

 

 Details about the context and constraints, the six components of the TIMU Architecture and the challenges of the global community, the UN and the US are presented in TIMU: The Transformative Approach to Monetarily Solve the Economic Crisis by Solving the Climate Crisis which is to be published at end of the summer of this axial year 2009. For a summary see the various versions of the Tierra Manifesto of 2009 on www.timun.net  

 

May
16

The Questionable Quad and the Tantalizing Tierra

Post By gaia1 in Tierra Currency

 

Richard Peet and his students at Clark University in Worchester, MA, USA have called the IMF, the World Bank and the WTO the “Unholy Trinity” in their book of that name published in 2003. They point out that the lives of millions of people, particularly in the developing world, are intimately affected  by this “triad of hugely powerful,  well financed , but fundamentally undemocratic and out of control organizations.”  They share with minor differences the economic ideology of neo-liberalism, market fundamentalism and privatization.

 

Though some minor changes in voting and representation have been taking place and new programs are being launched to cope with the economic crisis, this triad still is still in control. As a matter of fact the IMF has risen like a phoenix after being promised a $1.1 trillion  and having receiving many of hundred billions of dollars in bonds. In September 08 it laid off about 13% of its expensive staff.

 

Besides this triad, there is a fourth institution that is less involved globally like the triad, but is more powerful than it. Unlike the triad organizations, this one is privately owned, secretive and not subject to democratic control. Like the WTO it is located in Switzerland, but not in Geneva. It is located in Basle and it administers the Basle Accords.  It controls the monetary system, visibly through the central banks of the industrialized countries, but indirectly those of developing countries. This Central  Bank of central banks is called the Bank of International Settlements or BIS. It has the same ideology as the one of the Unholy Trinity which means that it basically wants to keep, notwithstanding some small reformist changes, the status-quo in world’s monetary, financial, economic systems which enrich the few, impoverish the many and imperil the planet. Therefore, it can be rightly called a member of the Questionable Quad.

 

The Tierra Solution and its TIMU Architecture presents a tantalizing alternative to the present monetary system. As the monetary system is the glue that binds the monetary, financial, and economic systems together, a basic monetary change such as the introduction of the Tierra international reserve currency influences all three systems. It would  present a roadmap to resolving the economic crisis through resolving the climate crisis and would create an institutional funding mechanism for development and mitigation and adjustment measures.

 

May
16

The G2 Monetary Working Group

Post By gaia1 in Tierra Currency

Inspired by David Leonhardt’s article in today’s The Money Issue in the NY Times Magazine entitled “THE CHINA PUZZLE We need China to buy our government bonds to keep our interest rates down. But that’s just the beginning of the problem” I decided to launch the G2 Monetary Working Group. It would consist of 12 Chinese and 12 American representatives of government, business and civil society and one European, an Irish economist specializing in economic strategies and an emission-based currency unit.

 

In the TIMU book’s chapter on the US and the TIMU Architecture I discuss this working group in detail and its chances of contributing to a G2 partnership that Fred Bergsten of the Peterson Institute of International Economics recently wrote about in The Financial Times. The reason that I started this working group is to contribute to evolving this most important dysfunctional relationship to one that is beneficial to both and the rest of the world. If China were abruptly to change its dollars into SDRs—it already is contributing its bonds to the IMF in the SDR denomination—it would lead to monetary havoc in the US, China and the rest of the world. If smart negotiations were held to gradually transition from a dollar and other reserve currencies to SDRs or Tierras, it would benefit all. China and the UN GA President's Commission on Monetary and Financial Crises are already proposing a new national reserve currency and the present situation is untenable, let alone sustainable.

 

So the US and China have to cooperate to smartly untangle their relationship of too much consuming by US citizens (70% of GDP) and too much savings by Chinese citizens who do not have good health care, by corporations who profit by subsidies, low currency and by the government who builds a sovereign wealth fund. They also have to cooperate in terms of the climate crisis. China is facing a major carbon problem, particularly on account of its coal-burning power plants. Paul Krugman in his May 15 column in the NY Times makes it very clear that the international community may have to take steps, even impose a carbon tax on its exports, if China does not change. Protestations from the Chinese side that that such tax would violate WTO regulations will not hold water.

            It would be in the interest of both nations to negotiate a pact that would solve each other’s problems and, in one swoop, bring stability to the international monetary, financial, economic systems and reduce carbon emissions. This win-win situation would even be made stronger if the Tierra and its TIMU Architecture were to be adopted rather than the SDR as the sole international reserve currency!



 

May
15

Roubini, Renminbi,SDR, G2, Tierra

Post By gaia1 in Tierra Currency

 

May 14, 2009 was a significant day in the arcane area of international reserve and vehicle currencies, because one of the world’s top newspapers, The New York Times,  published two OPED articles on the subject. One of America’s best known economists who combines academia with an economic consulting business argues that America has to keep the US dollar as a reserve and as a vehicle currency. The other contributor is a well-established Chinese businessman  and academician who describes how the Chinese views the continuing decline of the American dollar and suggests that America should not assume that things will not change. Given that the latter’s government has openly called for a supranational international reserve currency and given that the former’s government has indicated that it wants to keep the monetary status-quo and given that  the UN GA President's Commission on Monetary and Financial Crises has called for a new global reserve currency,  the time is opportune to start thinking outside the box.

 

Roubini and his government are not  thinking outside the box while our Chinese friend Gao and its government are. One major reason that Roubini is not thinking outside the box is his tendency to think American rather than global. He lists the advantages for the US to maintain the dollar’s position, but he does not, as a real academic should do, list the disadvantages. In my forthcoming book about TIMU I have identified 8 disadvantages versus 4 advantages for the reserve currency issuing country. It is not only the danger and reality of easy credit and huge debts, but also the resentment of developing nations and emerging economies to have their scarce resources devoted to buying US securities with extremely low interest  to build up their reserves. If he were to think globally and outside the box and searching for a solution for resolving the world’s most urgent economic and climate crises he should be willing to entertain the Tierra Solution as a real, transformative solution for the 21st century monetary relations.

 

Since Keynes proposed the “bancor” in 1944 as the new international reserve currency, about half a dozen other proposals have been made. One of them was the issuance of Special Drawing Rights (SDRs) in the late sixties, the issuance of which would be decided by the governors of the IMF and be distributed to their members. The G20 London Summit decided to create $250 billion on account of the critical economic times.

 

It was in the late 1990s that Irish economist Richard Douthwaite proposed to have an international currency based upon emissions. His “ebcu” proposal together with its FAESTA Noordwijk Aan Zee Draft Treaty was discussed in a 2000 conference organized by ODE Magazine.

 

In the first quarter of 2009 the Tierra international reserve currency and its Tierra International Monetary Union (TIMU) Architecture was launched by the International Institute of Monetary Transformation. It is a carbon-based international reserve currency that would become part of a nation’s carbon account in a modified balance of payments that would be administered by the Tierra World Central Bank. The Tierra is proposed to be the successor of the SDR because, notwithstanding ongoing reforms in the IMF,  the IMF does not seem to be right institution to deal with real challenges of both the economic and climate crises.

 

If realism, boldness and imagination had prevailed at the G20 Summit on April 2 the world’s leaders of the major economies and their IFIs could not only have discussed China’s proposal for a supranational reserve currency (which is supported by Russia, Brazil and India), but would have also followed the recommendation of the UN GA President's Commission on Monetary and Financial Crises to adopt a global reserve currency. Then they could have proceeded in setting up a commission to study whether that currency would be carbon based or not given that the climate crisis and its funding cannot be separated from resolving the economic crisis.

 

Fred Bergsten, director of Peterson Institute of International Economics, has suggested in his article of April 8 in www.ft.com that the US and other reserve currency countries adopt the more limited proposal made by Governor Zhou to create “an open-ended SDR-denominated fund” into which dollar balances could be exchanged for SDRs. I consider this fund a responsible way to transit to a global reserve currency and, later on, to the carbon-based international reserve currency of the Tierra. Bergsten also suggests that the US and China use this reserve currency issue in forging a G2 partnership that “is needed to provide economic leadership to pass needed reforms at the existing multilateral institutions. Since China advocates currency consolidation, the US could insist that it contribute substantially to the IMF’s new lending facilities as a quid pro quo. The Europeans would have to concur, since the agreement would include a large increase in China’s voting rights at the IMF, where Europe is so heavily over-represented, but  China-US agreement would go far to seal the deal.”

 

Would it be possible for both nations to make an enormous step forward by basing the new global reserve currency on carbon emissions, of which both nations are the major producers? Such bold approach would preempt the difficult and less efficient use of the cap-and-trade and carbon-taxes methodologies to reduce GHGs since they do not include the perspectives of and justified funds for the ecological creditor countries in the global South.

 

 

May
04

The Carbon Standard for a Transformed Int'l Monetary System

Post By gaia1 in Tierra Currency

 

The interdependent monetary, financial and economic systems are presently still in a meltdown condition. Though stimulus packages are sprouting some ‘green shoots’, they may wither because a system overhaul is needed that addresses both the economic and climate crises.

 

This transformation has to include the international monetary system, the glue of the finance system which, in its turn, is the glue of the economic system.

 

An important part of the international monetary system is the currency exchange system that nations use to trade with one and other, settle debts and engage in other financial transactions. In the past we had a gold standard, a convertible sterling or convertible dollar standard resulting in fixed exchange rates. Since August 15, 1971 with the closing of the US gold window the international monetary system has gone into many different arrangements of exchange rates, ranging from flexible to fixed or pegged ones. The overall system has become primarily one of managed floating exchange rates with greater volatility than in the past.

 

Whether a nation adopts a fixed or flexible exchange rate is less important than its pursuit of sound economic policies. No sound economic policies are possible without dealing with the demands of the global climate crisis. A nation has, therefore, to pursue its domestic economic policies tied umbillically to the international resolution of the economic and climate crises.

 

Because the climate crisis is the more profound crisis, the economic crisis is to be resolved by resolving the climate crisis. Besides big investments  in alternative energy sources and adoption of various carbon reduction methods, there is also a monetary way to combat global heating. It consists of making carbon avoidance the convertibility standard in the same way that the gold standard,  the convertible sterling or dollar standard functioned in the past. Not only the benefits of fixed exchange rates but also the benefits of a sound domestic/global economic policies would be the result.

 

How can the nations’ currencies be pegged to carbon?  Each adult in the world would be given a same amount carbon emissions permits or CEPs. They become part of a nation’s  carbon account in its balance of payments. These CEPs represent value determined by the annual  average price of a ton of carbon on the world market. Thus, a new carbon avoidance currency or Tierra is created which not only represents a carbon accounting system, but also a store a value and a medium of exchange, the three functions of money. Making carbon the annually or biannually adjusted peg of the nations’ currencies and the concomitant need to settle their carbon balances, Tierras would flow from ecological debtor countries in the global North to ecological creditor countries in the global South, providing funds for development and climate mitigation and adjustment measures. This transformational change in the world’s monetary system would create a new financial and economic system that is based upon equity and sustainability,  the only characteristics that lead to stability.

 

 

 

 

 

May
02

The Tierra World Central Bank

Post By gaia1 in World central bank

The idea of World Central Bank has been around since the
middle of the 19th century when liberal economist John
Stuart Mill wrote about it and when the Paris International
Monetary Conference in 1967 hotly debated about it.
Among its proponents in the 20th century we find a
chairman of the US Fed, William McChesney Martin, the
influential journal The Economist and numerous other
supporters, mostly economists. Details can be found in
Benjamin Cohen’s The Future of Money’s last chapter
entitled Governing the New Geography.
The present economic meltdown has raised the need for a
global super-regulatory authority and both the G20 and the
UN GA President's Commission on Monetary and
Financial Crises are considering ways to deal with this
need. Jeffrey Garten, the Juan Trippe Professor of
international trade and finance at the Yale School of
Management deftly summarizes that need in his Newsweek
article of November 3 entitled “We Need a Bank of the
World.”

So, the need or even the clamor for a global central bank is
clearly articulated by its supporters with articulate
opposition by some and a silent majority in the middle for
whom monetary matters are too arcane to spend time on.
Advocating the need for a Tierra World Central Bank is
still a very uphill matter. It may become less so, if properly
understood and if enough political wisdom and will is
engendered among government, business and civil society.
The Tierra World Central Bank is a central bank that has
roughly the same functions as those banks advocated
earlier. It is different because it is based on the new
international reserve currency of the Tierra which would
not only replace present national currencies reserves of the
dollar, euro and yen, but also those proposed non-national
currencies that are based upon a basket of commodities,
currencies or the consumer price index. The Tierra World
Central Bank’s currency of the Tierra is based upon carbon
emission permits that are allocated on an equal basis to all
adults in both the global North and South. This carbonbased
reserve currency becomes part of a nation’s balance
of payments, resulting in a carbon account that has to be
balanced like a nation’s financial current account.

The consequence of having to balance this ecological
account is that an institutional mechanism is being created
where ecological debts in ecological debtor countries in the
global North are paid to the ecological creditor countries in
the global South. As funding for development and climate
mitigation and adjustment measures is going to be kingpin
for resolving the climate crisis in the December 09
Copenhagen meeting of the UNFCCC the acceptance of the
Tierra as an international reserve currency, its incorporation
into a nation’s balance of payments and its administration
by the Tierra World Central Bank is an option of crucial
importance. It would constitute a roadmap that would
resolve the economic crisis by resolving the climate crisis.