Wanted: a new global monetary system

15 December 1999

Debates on international finance are taken further in a new book which argues for the democratization of money creation and a new basis for the work of the IMF. The Ecology of Money argues that the way money is created vitally affects its impact on the economy, society and the environment. User-created currencies are equitable, if limiting, while money supply created by commercial banks creates instability and a need for continuous economic growth to repay the loans.

Richard Douthwaite proposes a new international monetary system. At the moment countries with “reserve currencies”, especially the USA, receive billions of dollars worth of imports in exchange for nothing but paper notes and electronic credits. He suggests that the world needs at least four types of money. One is an international anchor currency, the second is national (or regional) currencies, third a plethora of local currencies and fourth special currencies for savings.

He argues that the international currency should be based on our scarcest resource: the environment, and in particular carbon dioxide emissions. The IMF would assign Special Emissions Rights to each government allowing the right to use a fair share of the atmosphere’s absorptive capacity, as well as energy-backed currency units. Countries would thus adjust their economies using the energy supply rather than the credit supply.

The Ecology of Money is published by Green Books for the Schumacher Society.

Contact: greenbooks@gn.apc.org or

see: www.greenbooks.org

The Bretton Woods Project and BothENDs report Questioning the World Bank/IMF Growth Model contains a piece by Richard Douthwaite and other writers on related issues. Order from the Project, or see the introduction.