Resurrecting Keynes To Stabilize The International Monetary System

The authors adapt the basic principles of the Keynes Plan and argue for the creation of supranational bank money that would coexist alongside 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.