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

therefore be fully backed, ensuring maximum security and stability
of the unit involved. In this sense, the Terra is simply a standardised
inventory receipt useable as medium of exchange.
In summary, the Terra would reduce operational costs under
normal monetary circumstances, and in addition constitute a very
robust back-up system in case of further major monetary instabilities.
A specialised business entity called the Counter trade Alliance
would issue this 'currency' in exchange for deposits of inventories of
the goods in the basket. It would also be in a position to pay back
Terras on request in national currency against a small fee, by
delivering the corresponding raw materials to existing commodity
exchanges and thereby transforming them into conventional national
currency when needed. The commodity exchanges involved would
be the same ones as those used for commodity futures trading today.
Because its liabilities are fully covered in this way, the Counter trade
Alliance would benefit from an AAA rated security risk.
Finally, by passing the storage costs of the basket to the bearer of
the Terra, one ends up with a currency with a built-in demurrage
charge (i.e. a time-related charge on currency holdings, conceptually
similar to a negative interest rate) estimated at 3-4% per annum. This
combination in a currency of the features of inflation security and a
demurrage charge provides this trading currency with the two
unusually interesting attributes already explained earlier.
1. The use of the Terra would automatically tend to counteract the
prevalent business cycle, thereby improving the overall stability and
predictability of the world's economic system and business
conditions. For the first time in over 60 years, the possibility of a
global recession beyond the control of monetary authorities cannot be
dismissed. As Paul Krugman put it, 'Problems we thought we knew
how to cure have once again become intractable, like temporarily