The History of Reserve Currencies

https://www.visualcapitalist.com/cp/how-reserve-currencies-evolved-over-120-years/

Lets begin with understanding money as liquid, which is how CHINESE describes MONEY as WATER.

MONEY as WATER & LIQUIDITY

The expression "money is like water" is often attributed to Chinese culture, and it reflects a particular mindset about wealth and its fluid nature. While not everyone in China may use this expression, it does capture a common attitude towards money. Here are some reasons why money is sometimes metaphorically equated with water in Chinese culture:

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.

MONEY & CURRENCIES PEGGED to CO2 as LIQUID SUPPLY & DEMAND

Here's a conceptual approach to a real-world system where money is pegged to CO2 supply and demand:

It's important to note that while this concept provides a real-world approach, it is highly complex and would face numerous challenges, including international cooperation, regulatory frameworks, and the need for a robust infrastructure to manage the carbon credit system.

The CARBON COIN/ DOLLAR

Pegging an international currency to a conception of CO2 reduction involves linking the value of the currency to the success and progress of global efforts in reducing carbon emissions. Here's a conceptual framework for how this might be achieved:

Implementing such a system would require significant coordination, cooperation, and commitment from the international community. It would also involve addressing challenges such as varying levels of economic development, differing national priorities, and potential resistance to adopting a new international currency system. Additionally, technological advancements in monitoring and verification of carbon reduction efforts would play a crucial role in the success of this conceptual framework.

How Pegging CO2 as LIQUIDITIES to CURRENCY EXCHANGES can OVERCOME EXISTING INERTIA to CO2 REDUCTION

Pegging CO2 as liquidities to currency exchanges could potentially introduce innovative financial mechanisms to overcome hurdles in CO2 reduction efforts. Here are ways in which this approach might help address challenges:

Market-Driven Incentives:

How it Helps: By pegging CO2 as liquidities to currency exchanges, you create a market for trading carbon assets. This introduces market-driven incentives for businesses and nations to reduce emissions, as they can profit from selling excess carbon liquidities or face costs for exceeding their allocated limits.

Flexibility and Adaptability:

How it Helps: Liquid markets are often more flexible. This flexibility can be harnessed to adapt to varying circumstances, allowing entities to buy or sell carbon liquidities based on changing economic conditions or technological advancements. It provides a dynamic system that can adjust to evolving emission reduction challenges.

Global Collaboration through Trading:

How it Helps: A liquid carbon market could facilitate global collaboration. Countries with a surplus of carbon liquidities can trade with those facing challenges, promoting a more efficient allocation of resources for emissions reduction. This approach encourages a collaborative, international effort to achieve overall reduction targets.

Liquidity-Backed Investments:

How it Helps: The concept of CO2 liquidities as a tradable asset could attract investments in sustainable and low-carbon projects. Financial instruments backed by carbon liquidities, such as bonds or green funds, may become attractive to investors, funneling capital into initiatives that contribute to emission reduction.

Transparent Market Mechanism:

How it Helps: Liquid markets often operate with a high degree of transparency. This transparency could help overcome challenges related to verification and trust. It ensures that the buying and selling of carbon liquidities are conducted with integrity, minimizing the risk of fraudulent activities.

Carbon Liquidity Reserves:

How it Helps: Establishing reserves of carbon liquidities can act as a stabilizing mechanism. During economic downturns or unexpected challenges, entities can tap into these reserves to meet emission reduction targets without facing excessive financial burdens, promoting long-term stability in carbon markets.

Economic Growth with Emission Reduction:How it Helps: Liquid carbon markets could provide a mechanism for balancing economic growth with emission reduction. As economies grow, they may need additional carbon liquidities, which can be acquired through the market. This allows for economic development while ensuring adherence to overall carbon reduction goals.

Private Sector Participation:

How it Helps: Liquid carbon markets could attract greater participation from the private sector. Businesses can actively engage in emissions reduction efforts by buying and selling carbon liquidities, aligning their financial interests with environmental goals and contributing to a more sustainable economy.

Carbon-Backed Financial Instruments:

How it Helps: The creation of financial instruments backed by carbon liquidities, such as carbon futures or options, could provide businesses and investors with tools to manage and mitigate risks associated with emissions. This can enhance financial planning and encourage long-term sustainability.

Public Awareness and Engagement:

How it Helps: A liquid carbon market could be designed to include public participation, allowing individuals to buy and sell carbon liquidities. This engagement can increase public awareness and encourage environmentally conscious behavior, as individuals see a direct link between their actions and the carbon market.

While pegging CO2 as liquidities to currency exchanges introduces potential benefits, it's crucial to recognize that implementing such a system would still require careful design, international cooperation, and ongoing monitoring to ensure its effectiveness in promoting meaningful CO2 reduction. Additionally, considerations for potential market manipulation, regulatory frameworks, and social equity issues should be addressed in the development and implementation of this approach.

The POLITICAL ECONOMY of CARBONCOIN

A political economist would likely analyze the concept of pegging CO2 to currency exchanges from a multidimensional perspective, considering the economic, political, and social implications of such an approach. Here are some aspects a political economist might consider:

Economic Efficiency:

Analysis: A political economist would assess whether pegging CO2 to currency exchanges promotes economic efficiency by creating market-driven incentives for emissions reduction. They might evaluate the efficiency of the proposed carbon market in allocating resources and encouraging innovation in low-carbon technologies.

Distributional Effects:

Analysis: Political economists would scrutinize the distributional effects of the proposed system. They might investigate how the costs and benefits are distributed among different socioeconomic groups, regions, and nations. Consideration would be given to whether the approach exacerbates or mitigates existing inequalities.

International Cooperation:

Analysis: Political economists would study the feasibility of achieving international cooperation through a liquid carbon market. They might analyze the political dynamics and power structures among nations, assessing whether the proposed system provides sufficient incentives for countries to collaborate on emission reduction efforts.

Policy Instruments and Instruments Choice:

Analysis: Political economists would examine the choice of policy instruments within the proposed framework. They might consider the use of market-based mechanisms, regulatory approaches, and the role of government intervention. The analysis would explore how different policy instruments align with political and economic ideologies.

Political Will and Implementation Challenges:

Analysis: Political economists would assess the political will required to implement and sustain such a system. They might analyze potential political resistance, lobbying efforts, and the ability of governments to commit to long-term emission reduction targets, considering the political economy of climate change policies.

Environmental Justice:

Analysis: Political economists would scrutinize the environmental justice implications of the proposed approach. They might assess whether the system disproportionately affects vulnerable communities or if it addresses historical disparities in environmental burdens.

Role of Private Sector and Corporate Influence:

Analysis: Political economists would consider the role of the private sector within the proposed framework. They might analyze how corporations influence policy decisions, whether the approach aligns with corporate interests, and how the involvement of the private sector may impact the effectiveness of emission reduction efforts.

Policy Stability and Long-Term Commitments:

Analysis: Political economists would evaluate the stability of the proposed system over the long term. They might consider the potential for policy reversals with changes in government or economic conditions, assessing the resilience of the system to political volatility.

Global Governance and Institutions:

Analysis: Political economists would examine the global governance structures and institutions needed to support the proposed system. They might explore the role of international organizations, the effectiveness of existing institutions, and the need for new forms of global governance in managing a liquid carbon market.

Public Perception and Democratic Legitimacy:

Analysis: Political economists would consider how the public perceives the proposed approach and whether it aligns with democratic principles. They might assess the level of public engagement, participation, and the legitimacy of decision-making processes in shaping climate policies.

In essence, a political economist would analyze the proposed approach within the broader context of political and economic systems, considering its implications for power dynamics, social equity, and the overall political economy of climate change mitigation. This multidimensional analysis would provide insights into the feasibility, effectiveness, and potential challenges associated with pegging CO2 to currency exchanges.

Image Source: https://www.investopedia.com/terms/c/currency-peg.asp