THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

The Terra makes sense as a business initiative for a number of
reasons, which will be presented next.
The world has been living without an international standard of
value for decades, a situation, which should be considered as
inefficient as operating without a standard of length or weight.
Furthermore, as the Asian, Russian and Latin American currency
crises of the past few years have demonstrated, currency instability
can take a dramatic toll on international business contracts and
transactions. The cost of these foreign exchange risks to business and
society are quite substantial (see sidebar).
One way in which corporations have learned to adapt to this lack of
an international standard of value is by resorting to barter. The
volume of counter trade (international barter) was estimated at $650
billion in 1997 by the IRTA (International Reciprocal Trade
Association) and is growing at 15% per year, three times the rate of
conventional-currency-denominated transactions. As this was before
the effect of any of the recent currency crises, counter trade is likely
to be over $1 trillion for the first time in the year 2000. Two out of
three of the Fortune 500 corporations are regularly involved in such
transactions."' Such transactions are expensive in legal and operating
costs, because of a lack of standardisation. The Terra, from this
perspective is simply a standardisation of an international barter unit.
Such a standardisation has already started within certain business
sectors (see sidebar on sectorial barter standards), but so far no crossindustry
standard has been set up. Furthermore, this could be
achieved in a way that it would provide substantial additional
benefits not only for business but also for society in general.
Because it is designed to be by definition inflation proof, it would
be ideally suited for long-term planning and longer-term contractual
and international trading purposes. It would be issued on the basis of
physical inventories of the products incorporated in the basket,