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Presentation
A Global Currency for a Global Economy: Getting from Here to There
G20 and IV Astana Economic Forum (2011)
  • Warren Coats
Abstract

In this paper Dr. Warren Coats proposes stabilizing the value of money by linking it to an independently defined unit of account with a relatively constant real value. A common unit of account would lower the cost of trading by reducing transaction and information costs and would increase world trade and improve the efficiency of international resource allocation. The unit he suggests, a commodity basket, would not have the shortcomings that afflict the gold standard-gold's fluctuating relative value. The link between money and this unit that he suggests, fixing the value of a unit of money in terms of the commodity basket by requiring its indirect redeemability, would not have the shortcoming that makes multigood commodity standards very costly-­the need to maintain large reserves of all of the commodities in the basket. The innovative idea of indirect redeemability, discussed by Yeager, Greenfield, and others, keeps the quantity of money equal to the amount demanded when its value is given by the commodity basket, without the need for the monetary authority to warehouse the commodities in the basket. Indirect redeemability refers to the requirement for the issuer of money to exchange it on demand for some other convenient asset equal in market value to the commodity basket, whereas direct redeemability refers to the requirement to exchange money for the commodity basket itself.

Keywords
  • SDR,
  • International Monetary System,
  • Reserve Currency,
  • Gold
Disciplines
Publication Date
Spring 2011
Citation Information
Warren Coats. "A Global Currency for a Global Economy: Getting from Here to There" G20 and IV Astana Economic Forum (2011)
Available at: http://works.bepress.com/warren_coats/23/