Trust and confidence are the socio-psychological attributes that everyone  considers to be essential to get the local and global economies going. How do you build them if the population does not have confidence in their politicians, let alone their banking executives?
 
No confidence building can take place without political and economic leaders basing their policies on equity and sustainability. People have to see and experience fairness. They have to see and experience social, economic and ecological sustainability rather than some short-term measures and rhetoric.  
 
How can that be done? In last instance it can and has to be done by implementing values that humanity at this juncture in its history considers essential. Which are those values? We do have the Universal Declaration of Human Rights and, recently, the UN High Commissioner of Human Rights and a Human Rights Council. We also have a 21st century successor of the Universal Declaration of Human Rights in the emerging Earth Charter which integrates the social and ecological values within a framework of the community of life. Humans are members of this Earth Community and they are not necessarily the most
important ones in maintaining the Earth’s processes of the flowing of energy, the cycling of matter and the webbing of life. Without microbes there would not be life on planet Earth!

It is the primacy of values and principles over methods that should guide societies in building confidence and trust. Finally, building confidence and trust within the value context described above and taking measures such as the reversal of privately-owned banking systems to publicly owned banking systems, including central banks such as the US Federal Reserve Bank is to be pursued within the largest historical challenge of the sustainability revolution. What that means and the most important question in that regard is succinctly expressed by the first US EPA Administrator in the early 1970s.

The Terra solution

Terra (Latin for Earth) is the name that I have given to the new international reserve currency that is based, not upon gold, nails, cowries or a basket of major currencies or commodities, but on carbon emissions permits or CEPs. These CEPS would be allocated on an equal basis to all adults on the planet—perhaps we should include youngsters because they sometimes have a heavy carbon footprint also —using the methodology of Cap and Share, www.capandshare.org. The targets of carbon reduction will determine the amount of CEPs each adult receives; the carbon price on the world market will determine the value of the CEPs.  
 
The Terra solution was raised publicly on January 15 during the first session of the UN Department of Information (DPI) where both the senior advisor, Dr. Michael Clark, and Ambassador Sofia Clark were representing the UN General Assembly President's Commission on Monetary and Financial Crises to the NGO community at UN Headquarters. In response to my comment that followed a question of how the Committee was dealing with the climate crisis and that suggested that member states establish an
international reserve currency based upon carbon emissions and which would be made part of a nation’s balance of payments, Dr. Clark reacted very positively by calling the suggestion “brilliant”. Later on during the session he referred back to it as an example of how the NGO community can contribute to the Commission’s work.
 
There is general agreement that the new international reserve currency is not to be bound to a nation such as the USA or to a region such as the EU. Many suggestions are being made to peg the currency to non-emission standards. From John Maynard Keynes in 1944 with his “bancor” to several others in the sixties and seventies,  to Joseph Stiglitz who has for some time been suggesting a “global greenback” for that purpose. Irish economist Richard Douthwaite and I are among the main scholars/activists who are advocating an emission based currency unit. It is understandable that earlier scientists and statesmen have not chosen to base their currency unit on emissions, because it is only in the last decade or so
that the climate crisis has been hitting home.

Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist                           
International Institute of  Monetary  Transformation.   www.timun.net  
New York City, March 2009


This is the second of three articles by the author on the introduction of a sustainable monetary system.  The final episode will be published March 24.

Episode 1 

Episode 3