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Frans C. Verhagen, M.Div., M.I.A., Ph.D.,
Sustainability sociologist
Founding President, The International Institute of Monetary Transformation
ECOSOC Representative, the International Peace Research Association
President, Earth and Peace Education Associates International (EPE); ;
718 275-3932(voice and fax); 917 617 6217 (cell)

New York City

February 7, 2009

The goal of any reform of the international monetary system which is the glue of the world’s financial and economic system is to achieve stability, which can only be accomplished by pursuing equity and sustainability. To reach this goal of an equitable, sustainable, stable monetary system quite a few reforms are being proposed to deal with the deepening financial and economic crises which will get worse, particularly if no proper and timely reforms are implemented. It is argued here that

1.    reforms that predominantly are national or regional in scope rather than global will not achieve those three monetary goals and
2.    reforms that do not simultaneously address themselves to the ever deepening climatological crisis will equally fail to make lasting impact.

Thus, it is proposed here that a genuine transformation in the international monetary system is to take place that addresses itself to both to the economic and climatological crises. The Terra International Monetary Union (TIMU) or TIMU architecture is presented here for serious consideration and ensuing policy development, particularly by the new Obama Administration.

Faced with the economic and climatological crises and their associated crises in food and fuel the year 2009 may become an axial year in the history of the planet and humanity. It is during this and the following years that humanity has to come up with wide-ranging measures that will set the economic and climatological trajectory of this new century. What is most needed in devising this road map are a deep understanding of  the crises’ origins and their vertical and horizontal interconnectedness, and the explicit adoption of  a set of integrated social and ecological values that provides the vision for this most important of journeys.

Following the findings of financial historians such as Niall Ferguson, Barry Eichengreen and of political economists such as Benjamin Cohen, applying the values and vision of the Earth Charter–the 21st century successor of the 20th century Universal Declaration of Human Rights– and using the EPE sustainable communities development’s planning framework of contextual sustainability, I have to come to the following conclusions. They will be listed here and explained below.

1.    Government, business and civil society are to seriously consider making carbon emissions permits the basis of a new international currency, so that ecological creditor nations in the global South are able, as a matter of historical justice, to receive the necessary funds for their economic development and for their policies and programs in dealing with the climate and energy crises.

2.    They are to seriously consider the adoption of  the monetary architecture of an emissions-based currency unit such as the one proposed in the Terra International Monetary Union to wit: its World Central Bank, its modified balance of payments schedule and the independent national Terra Administrations or Terra Boards in participating or TIMU Treaty nation states.

3.    Presently advocated reforms such as the International Clearing Bank (D’Arista), Global Green Dollars (Stiglitz), INTOR (Mundell) and similar efforts of non-emission based currency concepts are considered steps towards the emission-based currency concept of the Terra and its international and national monetary architectures.

The new international currency of the Terra (Latin for Earth) which  is based upon carbon emissions permits which are allocated following the Cap and Share methodology, is to function as a means of international exchange, a store of value and the accounting unit of carbon credits and debits.

Treaty nations will use a modified balance of payments schedule where carbon balances in the form of Terras are added to the many economic account lines in their current and capital flows accounts, so that both their economic and climatological balances are integrated in one place and considered of equal financial value. In order to avoid co-mingling the Terra currency with the national and other local currencies (LETS) each treaty state will establish an independent Terra Administration or Board that administers the carbon based international currency.  Much of the Treaty content can be based upon the FEASTA Draft of the Noordwijk aan Zee Treaty of 2000, organized by Ode Magazine with the assistance of Irish economist Richard Douthwaite and British artist Aubrey Meyer of Contraction and Convergence fame.

The World Central Bank (WCB) like a global European Central Bank carries out its administrative, monitoring and credit creation functions under the governance of the treaty nations. Though the treaty nations surrender some substantial sovereignty, the WCB is not a world government. It would be part of the UN system roughly in the same way the IMF is affiliated with the UN today. Some of the activities of the IMF can be transferred to the WCB, but not its weighted decision making, its subscription or capital structure and other elements.

A fourth major component of the TIMU system is its emphasis on bioregional economics. The present economic crisis has clearly shown that an export-oriented economy, particularly by developing nations to gain foreign exchange to pay for their debts and often to buy luxury items for their elites, is not workable. Even industrialized nations such as the USA and Germany are suffering huge decline in exports. Thus, placing priority on sustainable bioregional economies with a reduction of international trade is to be recommended. On account of the climate crisis frugal trade with a reduction in food, goods and services miles is to be pursued besides fair and free trade.

Two additional components of the TIMU architecture are 1. fixed exchange rates which are set annually by the WCB based upon the carbon price of the global carbon market; 2. the methodology of capping GHGs, particularly CO2 and its allocation as developed by the Dublin-based CSO
The politics of a TIMU Treaty are complicated and will entail heavy lifting by not only governments, but also business and, perhaps less so, civil society. A mobilization strategy is being developed based upon theories of my former Columbia sociology professor Amitai Etzioni in his Active Society.
At the highest level of UN decision-making a major support for TIMU seems to be forthcoming. On October 30 a day-long interactive Panel on the Global Financial Crisis was convened by General Assembly President Father Miguel D’Escoto Brockmann. There were several points of agreement that augur well for a serious consideration of the TIMU Treaty.  Member states

1. “recognized the need for deep changes in the governance of the international financial institutions”;

2. “made an urgent call for the United Nations to play a central role in the search for solutions”;

3. agreed that dealing with the financial crisis requires coordination with the climate, food and fuel crisis. Out of this high-level consultation the President’s Commission on the Reform of the Monetary and Financial System has emerged which made its first report on January 7.

On January 15 during a briefing to the NGO community at UN Headquarters Dr. Michael Clark, senior advisor to the Commission, responding to my question about  the feasibility of having an international currency based upon carbon emissions permits allocated according to the cap and share methodology  and incorporating carbon balances into a modified balance of payments schedule, exclaimed “That’s brilliant.” The previous questioner, a Maryknoll sister, had asked how the President’s Commission was going to incorporate the climate crisis. His answer was tentative and, so, I think that was the reason that he was relieved by hearing the Terra proposal.
Though there are about a score of reasons why the TIMU proposal is a good one and whose time seems to have come, one of the most important reason is the transfer of Terras from  the North to the South, so that humanity is able to push forward with the MDGs. Given the poor outcome of the latest round in Funding for Development (FFD) in December at Doha—IMF and IBRD were even absent—TIMU’s financial flows would be an enormous leap forward in resolving the myriad of funding needs for UN programs, for funds in the form of Terras would flow from the ecological debtor nations in the rich North to the ecological creditor nations in the poor South.

In conclusion, the confluence of the economic and climatological crises and their ever deepening impact on all people and societies in the global North and South is a grand opportunity for rethinking and transforming the international monetary architecture. Such international monetary system would become the glue of a transformed international financial and economic system replacing the present international economic system that still enriches the few, impoverishes the many and endangers the planet. The proposed Terra International Monetary Union or TIMU system could be an essential part of a comprehensive approach to dealing with the global economic recession and the climate crisis, while also expediting humanity’s transition into  sustainable societies which will lead to greater purchasing power and quality of life not only in the global North, but especially in the global South.


Resources for the TIMU project will be available in medio February at while is open for participation. Readers are strongly urged to become part of the TIMU Working Group now and, later on, of the Institute in order to carry this enormous challenge of TIMU forward. Every reader is invited to sign the International TIMU Petition and have his/her network, physical or online, do the same. An important source of worldwide activities on monetary reform can be found on There this SPS is listed together with two other outstanding statements. The website also shows the excellent work that Dr. Hazel Henderson has been doing for many decades. It is not only her widely acknowledged understanding of economics and monetary matters that shines through, but also her ethical commitment as expressed  in her use of the integrated value system of the Earth Charter.

Finally, those who are interested in the full description of the TIMU architecture and its politics to implement it  can purchase a hard copy or an electronic one of my book TIMU: The Transformative Monetary Approach to Resolving the Global Economic and Climatological Crises  from Cosimo On Demand Publishing, New York City, the publication date of which will be Summer 2009.

“Action does not spring from information, but a readiness for responsibility.”
Dietrich Bonhoeffer

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  1. international clearing union linked to this post on March 29, 2010

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