Two caveats to be begin:
Currency as money is liquid in nature. Any exchange in liquidation.
Carbon, on the other had, vapour based, or rather are solid specks suspended in vapour.
Somehow we need to formulate:
Money = Carbon Reduction.
The equal sign is the peg.
Carbon is neither a tax or credt, which is just a saving coupon. None has the peg. The peg is what keeps everything transparent, trackable, & exchangeable in terms. Think of it like returning to currencies pegged to the gold (a sold liquid) standard.
So a robust formulation of a peg carbon reduction must be agreed by all states.
Image Source: https://www.wallstreetmojo.com/money-supply/
But personally adapted.
Here´s what I propose, turning CO2 as Liquidity
If we conceptualize CO2 as liquidity rather than a gas or vapor, we are essentially considering carbon dioxide as a form of tradable liquid asset that represents environmental impact. This approach adds an additional layer to the integration of CO2 into a financial system. Here's how this could be incorporated into the concept:
This conceptualization aims to integrate the idea of liquidity into the carbon economy, treating CO2 as a tradable liquid asset with a value that can be influenced by market forces. It introduces the dynamics of supply, demand, and liquidity management into the broader context of environmental sustainability. As with any innovative financial system, careful planning, regulation, and adaptation are crucial for its successful implementation. Additionally, it's essential to consider potential unintended consequences and continually assess the system's effectiveness in achieving environmental goals.
Suppose we have just 1 central bank run by climate scientists who provide an index of total atmospheric carbon. This then be equated with the total currency available. They are the peggers.
We have one clearing house to trade like real green dollar. The less carbon in the Atmosphere, the better gdp, better yet call it sustainable domestic index.
Growth can then only be equivalent as carbon reduction. This will drive investments based sustainability geared towards how could fast one reduces.
Substitute Gold for carbon reduction.
Image Source: https://www.wallstreetmojo.com/medium-of-exchange/
What we swap currency for stock (of carbon):
Image Source: https://www.wallstreetmojo.com/currency-market/
Table modified.
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