What is the currency system’s role for establishment of effective economic justice and solving the environmental, social and economic crisis?

Currency is an instrument designed to make economic exchanges easier, to value goods, commodities and services. It is a tool to ease the economic flows. Now, money has been transformed into a tool for domination and power, accumulation of assets, unbridled speculation. It is part of the “competition between all” ideology, which is dominated naturally by the strongest and the result is the terrible economic and environmental situation we face nowadays.

We are now reaching a point-of-no-return in the destruction of environment and human societies. The present world economy is completely entropic and is bound to collapse (laws of life).  It is very urgent to change our modes of living and create a sustainable world with a sustainable economy, with justice at the core of the new economic dispensation. The currency system must be able to help create balance, justice and harmony in the economic relations. Its basis, therefore, must reflect multilateralism.

It means that it must be a tool that will help to put an end to competition between nations, it is not just a tool to reduce the risk of major crisis in the present market-forces-dominated global economy. It has to be part of a set of global measures such as international regulation of the financial system, eradication of the tax havens, and of course a huge program for eradication of hunger and extreme poverty, a Green and Global Marshall Plan.

Multilateralism means the UN have to be at the center of the system, very unlike the present system where IMF and World bank are actually ‘independent’ from the UN control. So a new currency system has to be designed by the community of nations and the management has to be delegated to the UN system, under the supervision of the General Assembly. That is the first condition to create a fair and democratic international currency system. If there is no democracy, there will be domination by one or a few nations and we will not solve the problem.

The new currency system has to reflect the search for stability, unlike the present system of floating currencies. It will also serve as an instrument to grant loans to developing nations at a low interest rate for (today they can hardly afford to borrow from the financial markets), but without the current Conditionalities involved in the Structural Adjustment Programs. There has be devised a new development contract with the developing nations (and which is now being forced upon the European nations members of the EU).

 Which model(s) of a new reference currency should be promoted?

We can immediately think of the Special Drawing Rights as a possible instrument. But the SDRs are defined according to 4 currencies (US $, €, £, Yen). If we extend the SDRs to 4-5 more currencies, it is like shifting from G7 to G8 and G20. This is not the solution. Furthermore, if, for example, the USD collapses tomorrow, then automatically does the SDRs plunge likewise.  And last, SDRs are under the control of the IMF which is not a democratic institution.

Above all, the central point to consider is to have a currency which serves as the pivotal value for all world currencies, at fixed rates with a limited spectrum of variations.

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Such currency might be weighted and periodically revised by an index value based on a basket of commodities (Global Commons). It is difficult to explain for me, but this currency has to reflect the fact that we live in a finite world with finite resources. So why have an unlimited creation of money when this money is used to promoting a model of development which is based on an excessive consumption of goods and of the planetary resources. That means that nations have to define in parallel a basket of Global Commons, the management of which (including the pricing issue , of course) will be devoted to the nations altogether, via the UN system, and not, as off today, left in the hands of the market forces, speculation, financial conglomerates. Staple foods, metals, oil and others should fall within that category. We must shift from an economy of private owners only to an economy where the most important resources for human basic needs and global balance are managed by the stakeholder nations altogether. That is a quantic revolution of consciousness that we must achieve.

 Are the main issues and challenges addressed in the presentation– any specific additional issues and areas that need to be researched further?

We should insist on the fact that we have to shift from a system where the creation AND CONTROL of money is granted to private banks (in Europe, the vast majority of monetary aggregates are the creation of banks) to a system where public interest gets that control back, otherwise, democracy is an illusion. ( we all know this example where the US Fed would have granted USD 1200 billions in loans to Wall Street banks at 0,01% interest rates, and then these banks accept that nations states borrow that same money at 6-7..10%…

Recently, I attended the XIIIth Conference of Unctad in Doha, Qatar. There has been a putsch attempt by a pool of developed nations (US, EU, Japan, New Zealand, Canada…) to withdraw any consideration about finance from the scope of work of Unctad. The financial powers in the world are desperately trying to hold their grip upon the economies of the world at all costs for the civil societies and for the nations. It is a war which is going on, we have to make known to the public to a large extent the roots of the financial and monetary crisis and how to get out of it.

 

 

 

 

 

  • Practical recommendations concerning next steps and strategic directions?

 

The major problem is political. The US will not accept to renounce their domination and the dominant role of the US Dollar. In addition, would the world stop buying USD tomorrow, the US economy would collapse immediately and America would find itself facing their hardest crisis ever. Still, we cannot go on with the USD as the reserve currency of the world, because it is not only a practical issue, it is a political issue. We cannot disconnect the role of the USD as reserve currency and the ideological economic model which is promoted by America around the world. This model, sometimes called neoliberalism, is a failure. It has led the world to the very edge of chaos and dislocation, where we stand today. So we must absolutely change our economic relations from competition between nations to international cooperation and there is no room in this for the USD as a reserve currency.

So the way forward means putting pressure on the US and their allies by the international community for a deep reform, at the UN level, of the world currency system. It means stopping this system of “allies”, factions, self interest policies and so on. Rio+20, as Copenhagen, has been another failure. I am sorry to say that we lack the charismatic political leaders in the world today who could show the way.

Therefore, it is both a question of lobbying by nation states and a huge mobilization and campaigning by the civil society. This Global Ethics Forum could be a starting point. Making a forum is a good opportunity to exchange ideas. The most important thing now is what do we do to go ahead..?  I suggest the creation of a coalition of experts and civil society groups in order to promote this idea of a new reserve and exchange currency worldwide, as part of many other measures to step out of the present turmoil and crisis and create a new global economic system based on cooperation. Cooperation only is the future of the world. If we leave the world in the hands of competition, we will definitely destroy our planet, our home, and we have no other planet designed for us where we could go after spoiling this one. So this is definitely a major and urgent challenge.