The Ecor As Global Money: Towards a Green Bretton Woods System to Finance Sustainable and Just Transformation

Abstract

Global South countries face significant challenges to finance sustainable and just transformation. These challenges stem partly from the hierarchical character of the current international monetary system, which requires Global South countries to obtain U.S. dollars to finance the imports necessary for sustainable investments. To overcome this hurdle, we propose the foundation of a Green Bretton Woods System. A Green World Central Bank (GWCB) would be allowed to create its own unit of account, which for the present purposes we shall call the ecor. New ecor reserves could be created by the GWCB on demand. The ecor would be a global special purpose money similar to Keynes’ ‘bancor’. Various structures would ensure that the ecor could only be spent for social-ecological projects. Deficit countries would be granted loans in ecors that would be credited to their GWCB accounts to finance imports needed to combat the climate crisis and advance the process of sustainable and just transformation in their societies and economies. In this way, the amount of ecors would adjust endogenously to the real demands for socio-ecological change and would not be limited by reserves, or funding conditions from private finance. GWCB accounts of surplus countries would be debited in ecors, and the amount debited would only be allowed to be spent within the system. This would prevent a run on ecors. At the same time, it would provide an expansionary mechanism to overcome unjust international imbalances.

Keywords: Green Bretton Woods, green international monetary system, special purpose money, sustainable and just transformation

JEL Classification: E12, E42, F33, Q57