NEW MARKET HYPOTHESISRISK COST OF CARBONCENTRAL BANK DIGITAL CURRENCY

NEW MARKET HYPOTHESIS

How to manage climate systemic risk

Read More

RISK COST OF CARBON

Pricing climate risk into the global financial system

Read More

CENTRAL BANK DIGITAL CURRENCY

The case for a positive carbon price

Read More

Carbon Standard

Updated 10 February 2018

 

Copyright ©2014-2018 Center for Regenerative Community Solutions. All Rights Reserved
Please cite this page as:
Chen, Cloud, and van der Beek (2016). Global 4C – Monetary and Market Policy for Climate Change Mitigation. www.global4c.org

Carbon Standard

Complementary Currencies for Climate Change (4C) and the Global 4C administrative system are the proposed ‘tools’ for managing climate systemic risk. The social agreement of this mitigation policy may be called the Carbon Exchange Standard, or the Carbon Monetary Standard, or simply the the Carbon Standard. This Carbon Standard is really an exchange rate mechanism for central banks, and it will define how the price of 4C currencies (e.g. the Solar Dollar) will be adaptively coupled to national (fiat) currencies, and how the supply of the 4C will be pegged to recorded greenhouse mitigation. The Carbon Standard will take into account the macroeconomic objectives of achieving a risk mitigation goal, and it will also ensure that 4C rewards that are paid at the micro-financial level are reconciled with long-term service contracts. If a market actor defaults on their service contract, the associated carbon must be removed from the carbon stocktake, and  this will be achieved with global demurrage charges on 4C holdings.
.

 

 

Show Transcript. Discussion of the Carbon Standard.

Updated March 18, 2016

At the conclusion of World War II, political leaders and economists met at the 1944 Bretton Woods conference to negotiate a new monetary and financial system for encouraging international trade, prosperity, and peace. The proposed Carbon Standard may be compared with the Gold Exchange Standard of the 1944 Bretton Woods agreement. The Gold Exchange Standard was used to tie the value and supply of U.S. Dollars to gold held by the U.S. treasury. This was an attempt to give the U.S. Dollar and the world financial system stability and certainty. Its main weakness was the absence of mechanisms to prevent trade imbalances. From a technical point of view, the Carbon Standard is a much more sophisticated standard, because the Carbon Standard is a multi-disciplinary agreement to monetise greenhouse mitigation in all economic sectors and all geographic locations. The Carbon Standard will give the world economy greater stability and certainty with macro-economic controls to incentivise greenhouse mitigation. This will involve a transfer of purchasing power from a large basket of national (fiat) currencies into the Solar Dollar. The cost of the Carbon Standard will be carried by the world economy as globalised inflation (i.e. an inflation tax).

Since the end of World War II, the major existential risks to nation states have changed. Prior to World War II, the existential risks were conventional wars and economic vulnerability, today the risks are abrupt climate change, ecosystem overshoot, and nuclear war. Ironically, climate change is the result of the economic activity that was encouraged at Bretton Woods and beginning with the industrial revolution. After the Nixon Shock of 1971, the Gold Exchange Standard was abandoned in favour of a floating exchange rate system however the new system was even more expansionary and ignored climate change.

Under the Carbon Standard, the new Solar Dollar will operate differently to fiat currencies. Firstly, the Solar Dollar is a new class of currency termed a ’service currency’ and is not a fiat currency. Secondly, the Solar Dollar can be used to create a powerful socio-economic feedback, called the Solar Dollar bull market. The Solar Dollar bull market will have (1) high liquidity, (2) steady rising floor prices, (3) prices telegraphed decades in advance, and (4) price appreciation that could outperform most other asset classes. Bull markets are sometimes called Ponzi schemes. The new worldview is to classify previous economic growth as a Ponzi scheme because of its high greenhouse emissions intensity. A major problem is that most of the existing ’carbon debt’ is kept off the balance sheet of the world economy. The Carbon Standard will rectify this situation with adaptive Solar Dollar pricing in foreign exchange currency markets.

Since the 2008-9 Global Financial Crisis, it was found that central banks have had trouble stimulating economic growth with monetary policy. In Europe, for example, it appears that the use of Quantitative Easing (QE) tends to inflate equity and property markets and does not create enough real economic activity and new jobs. This problem can be addressed with the Carbon Standard because it will create green jobs with Green Quantitative Easing (GQE). Solar Dollars can also be used by citizens and firms as an alternative currency for protecting wealth, especially if national economies begin to struggle under worsening climate change and rising debt. The Solar Dollar will create a common narrative for scientists, economists, society, and politicians, and this will demonstrate that the Carbon Standard is effective. The Carbon Standard is needed because it can address three seemingly intractable problems at once: (1) man-made global warming, (2) dirty economic growth, and (3) debt-based economics.


 

 

Carbon Monetary Standard

Carbon Monetary Standard

REFERENCES

[1]

Chen D., J. Cloud and J. van der Beek (2015). ‘Global 4C: World Monetary Union for Climate Change Mitigation’. 2015 Canberra Conference on Earth System Governance: ’Democracy and Resilience in the Anthropocene’. Delton B. Chen, Jonathan Cloud, Joel van der Beek (November 20, 2015).

Show Buttons
Hide Buttons