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Resurrecting Keynes to Stabilize the International Monetary System

Pietro Alessandrini () and Michele Fratianni ()

No 1, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: We adapt the basic principles of the Keynes Plan and argue for the creation of a supranational bank money that would coexist along side national currencies and for the establishment of a new international clearing union (NICU). These principles remain timely because the fundamental causes of the instability of the international monetary system are as valid today as they were in the early Forties. The new international money would be created against domestic earning assets of the Fed and the ECB. The quantity of this supranational bank money would be demand driven and thus would differ from the helicopter-money Special Drawing Rights. NICU would not hold open positions in assets denominated in national currency and consequently would not bear exchange rate risk. NICU would be more than an office where to record credit and debit entries of the supranational bank money. The financial tsunami that has hit the United States in 2007-2008 provides a unique opportunity for a coordinated strategy.

Keywords: Keynes Plan; exchange rates; external imbalances; international monetary system; key currency; supranational banl money (search for similar items in EconPapers)
JEL-codes: E42 E52 F33 F36 (search for similar items in EconPapers)
Pages: 34
Date: 2008-10
New Economics Papers: this item is included in nep-cba, nep-hpe, nep-mac, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

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Journal Article: Resurrecting Keynes to Stabilize the International Monetary System (2009) Downloads
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