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UN calls for new reserve currency


The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit.

"Important progress in managing imbalances can be made by reducing the reserve currency country?s 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said.

Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity."

He said: "Greater use of a truly global reserve currency, such as the IMF?s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes," he said.



luis_de_sousa@mastodon.social
by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Wed Oct 7th, 2009 at 04:26:07 AM EST
Can we implement Keynes' Clearing Union as originally configured, charging interest on both positive and negative trade balances?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Oct 7th, 2009 at 04:27:13 AM EST
[ Parent ]
The last thing we need IMHO is a centrally issued fiat currency - which Keynes was proposing with his Bancor - and all the institutionalised baggage and politics that goes with it. But the Gesellian approach of payments by those with both credit and debit balances is on the right lines.

I see the requirement as for a global "Value Standard" - and a fixed unit of energy seems logical - by reference to which fungible Units of currency (eg a Unit redeemable for land rental value, or a Unit redeemable for energy value) change hands on credit terms against goods and services etc.

This credit would be guaranteed within a globally valid framework of trust - ie an agreement I call a Guarantee Society.

In such a decentralised "Peer to Peer" credit clearing model, the payments made in respect of the credit and debit balances would be for the use of the globally valid guarantee.

After all, the true economic value provided by a bank apart from service provision is that of its guarantee of the borrowers' credit. In a P2P credit clearing model, the banks become pure service providers, and their only capital requirement is in respect of their operating costs.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Oct 7th, 2009 at 07:19:27 AM EST
[ Parent ]
Chris,

Why would I accept an energy unit or land unit issued in Japan? Or why would them accept those issued by me?

The fungibility of these things is something hard for me to cope with. If there's no physical way of linking our energy networks I can't figure how would this work. With a global fungible standard energy vector (such as methanol) this can be done, but if the energy unit is issued on the electric grid this is not simple.

luis_de_sousa@mastodon.social

by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Wed Oct 7th, 2009 at 09:20:15 AM EST
[ Parent ]
A Unit redeemable in Japanese land rental value is redeemable only in Japan, so its fungibility in Japan is pretty straightforward. Its fungibility elsewhere depends on how much that Japan produces that the relevant country imports, because they could pay for these imports with Japanese land-based currency.

An element of exchange control is built in to land-based currency, or maybe a better way of looking at it is that seigniorage (the benefit received by an issuer of currency) stays local. John Law proposed a land-backed currency 300 years ago, and most value in circulation is deficit-based (issued ex nihilo by a credit intermediary) but land-backed, through mortgages.

Electricity is regional/continental rather than global, but wherever Units redeemable in electricity are issued and accepted they would be priced against a constant energy Value Standard. eg 10 Kilo Watt Hours, or equivalent in BTUs

The point is that a currency Unit redeemable in electricity would not BE a Petro or Electro or Energy Dollar (unit of measure or value standard), but it should have a fixed price by reference to the Energy Standard. The redeemability of the Unit would require both acceptor and issuer to be a subscriber to the same Electricity Pool agreement and clearing /accounting system.

The obvious candidate for a global energy vector is gas (bio-methane in the long term), and any producer could issue Units redeemable in gas. The unit guarantees/secures price, and acts as a means of payment for supply actually received. But it does not guarantee supply.

Carbon energy Units would be priced against the Petro, and the price in Petros would depend upon the mode of fuel use, I guess. eg power generation, transport, or residential.

The way that profligate energy producers may reduce energy use is to ramp up carbon fuel prices to global
levels, and then to issue Units to the citizens. They could either continue their profligate ways, by redeeming Units against energy consumed, or exchange the Unit for something else of value to them.


"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Oct 7th, 2009 at 06:22:26 PM EST
[ Parent ]
ChrisCook:
The last thing we need IMHO is a centrally issued fiat currency - which Keynes was proposing with his Bancor - and all the institutionalised baggage and politics that goes with it.
There are good reasons why a central authority with the ability to tell people no, thou shalt not issue any more units at this time is a Good Thing™.

From a comment in The Agonist: The Morality of Deliberate Defaults

The answer lay in the terrible depression in the early 1890s when so many banks failed. Second, a national currency did not fully exist, and banks issued their own currency that traded on something similar to an exchange market. The First National City Bank of New York was well known and highly trusted, so its notes traded in the major cities at 100 cents/dollar. Smaller banks traded at discounts. Third, there was no Federal Reserve or government intervention to help banks. If your bank made too many bad loans, it was wiped out. One of the features of 19th century novels in Britain and the U.S. was the periodic impoverishment of the hero or heroine when all their assets held in a "trusted" bank were brought to zero because the bank failed. This was a very common occurrence and made it incumbent on the individual to research very thoroughly the creditworthiness of a bank which held their deposits.
(h/t melo)

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Oct 7th, 2009 at 09:36:32 AM EST
[ Parent ]
You don't need a global authority/institution.

You do need global agreement on standards, with which Service-Providers-Formerly-Known-As-Banks, ensure compliance - ie "thou shalt not".

Also agreement on other standards, such as transparency, in particular, so everyone can see what Units are in issue, and who by.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Oct 7th, 2009 at 09:48:07 AM EST
[ Parent ]
ChrisCook:
You do need global agreement on standards, with which Service-Providers-Formerly-Known-As-Banks, ensure compliance - ie "thou shalt not".
Which is why bank credit never leads to credit bubbles. Well-known fact.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Oct 7th, 2009 at 09:55:26 AM EST
[ Parent ]
If the service provider/managing partner has a stake in the outcome from the decisions they make - ie they eat a share of any calls on the guarantee pool - then that concentrates the mind.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Wed Oct 7th, 2009 at 05:42:29 PM EST
[ Parent ]
Which is why no bank dabbling in Credit Default Swaps has gone bust over the past 2 years. Well-known fact, too.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Thu Oct 8th, 2009 at 02:41:31 AM EST
[ Parent ]
If you don't take the risk, how can you go bust?

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Thu Oct 8th, 2009 at 03:44:16 AM EST
[ Parent ]
For-profit service providers have a conflict of interest.

Public authorities can also go bust, and central banks occasionally do, but at least there are some procedures in place to detect and punish conflicts of interest, and an expectation of transparency which cannot be deflected by appeals to trade secrets or business practices.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Thu Oct 8th, 2009 at 05:25:35 AM EST
[ Parent ]
Migeru:
For-profit service providers have a conflict of interest.

You're telling me!

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Oct 8th, 2009 at 05:44:57 AM EST
[ Parent ]

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