Latest abstract for an article on TIMU

December 22, 2008

This article presents a proposal for transforming the international monetary system into the Terra International Monetary Union (TIMU). The TIMU system would be an essential part of a comprehensive approach to dealing with the global economic recession and the climate crisis, given that an international monetary system is the glue of the economic and financial system. While reform proposals, such as Keynes’ “bancor”, Stiglitz’s “global greenback” and others address themselves to providing the monetary glue of a new global non-national monetary standard between nations, the TIMU proposal adds to this huge challenge the inclusion of the ecological dimension, i.e. of carbon debts and credits, into their balance of payments (BOP) by adding an extra line for a carbon account. Using clauses of the proposed FEASTA's Treaty of Noordwijk Aan Zee, TIMU’s integrated accounting unit, the Terra, would include both the economic and carbon debts and credits between nations. By integrating both accounts TIMU’s Central Bank would become the global facility that administers the balance of payments between financial creditor nations in the global North who are ecological debtors to the nations in the global South, and the financial debtor nations in the global South who are ecological creditors to the nations in the global North. As a result sustainability, stability and equity can be achieved in the monetary field, possibly within a decade. The article describes the historical context of international efforts for a world currency--Mill’s political economy treatise of 1844, the 1867 Paris Conference, 1930 Bank of International Settlements, 1944 Keynes Plan, IMF’s 1969 Special Drawing Rights. Then it presents the six major components of the Terra International Monetary Union, particularly its Global Central Bank’s accounting, monitoring and credit creating activities and the necessary monetary institutions of the nations that become signatories of the TIMU Treaty. This is followed by a categorized list of reasons for the TIMU approach in dealing with economic and climate crises, showing both its strengths and weaknesses. Constraints and challenges for an eventual TIMU Treaty are discussed within the context of the ever deepening economic and climate crises. Main authors consulted are: Bonpasse 2007; Cohen 2004; Douthwaite 1992; Duncan 2005; Eichengreen 2008, Greider 1987 and 2003; Minsky 2008; Mishkin 2007; Mundell, various years; Skidelsky 2003; Stiglitz 2003. A discussing paper of 10 pages is available up
on request.