Monetary Peace

Frans Verhagen - December, 2010

Creating Sustainable Communities

Frans C. Verhagen, M. Div., M.I.A., Ph.D. is a sustainability sociologist, co-founder of Earth and Peace Education International (EPE), and director of its sustainability education and research program. He is also the founder and president of the International Institute of Monetary Transformation.

Social peace is a widely known concept referring to peaceful relations among humans. Ecological peace, less widely known, refers to peaceful relations between humans and Nature. Earth and Peace Education International (EPE) proposes a peace which integrates social and ecological peace, considering the dimensions of both in terms of research, education and action. Monetary peace is a newly coined phrase based upon the evaluation of the present international monetary system, i.e. monetary standards, exchange rates, currency matters, balance of payments. It deals with the social and ecological dimensions of those main components of the global monetary system, assessing their presence or absence and proposing ways to strengthen its social and ecological benefits.

The present international monetary system has not had a monetary standard since August 15, 1971 when the Nixon Administration closed the dollar/gold exchange window. This has given rise to great volatility in exchange rates, currency disputes, such as the one between the USA and China, and has subjected the system to currency manipulation and currency speculation, leading to permanent instability that produces socially adverse effects on the greater part of people and nations and ecologically adverse effects that threaten the wellbeing of the planet. In fact, it is considered a non-system by most observers and is even called criminal by Nobel Prize winner economist Robert Mundell.

The monetary system can be stabilized and contribute to achieving a monetary peace only though the pursuit of equity and sustainability. This can be done by democratizing international monetary relations and transforming the system’s structures and operations so that they facilitate the advancement of a low carbon and climate resilient development. Proposed by the International Institute for Monetary Transformation, an outgrowth of EPE, the Tierra Fee & Dividend global governance system (TFD) aims to produce these social and ecological benefits.

The social benefits of the TFD derive from its democratic nature. It proposes a global central bank made up of representatives of the various regional monetary associations which have equal decision-making power unlike the quota system of the International Monetary Fund (IMF). Through the bank it would make available ample liquidity for economies with deserving climate and development policies, programs and projects. This liquidity would be circulated into those economies as credit, unlike the present system where privately-owned banking systems create money as debt.

The major ecological benefit of the TFD would be derived from its carbon based monetary standard whereby the strength of a nation’s economy and currency would be determined by the level of decarbonization of its industry and the lifestyle of its citizenry. Thus a low-carbon and climate-resilient development would be advanced. According to Maurice Strong, Secretary General of the UN 1992 Rio Conference on the Environment in a personal communication (10/18/10), “This TFD global governance system is considered innovative” and “promising in light of the statement of post-Kyoto prospects.”

Information on a UN General Assembly Resolution to establish a UN Commission for Monetary Transformation and a first step towards achieving a monetary peace as proposed by the TFD can be found at The website also provides information on a grassroots effort for becoming engaged in TFD Global Governance Working Groups that would support the proposal through research, education and action. Additional information on monetary peace can be found on this website as well, including a PowerPoint on the topic presented at the July 2010 IPRA Conference in Sydney and the two IIMT’s press conferences held at the 2010 UN Climate Conference.