Four-Tiered Monetary System of the Future

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Sanjay Perera:

"According to Lietaer in his influential The Future of Money, there is a four-tiered monetary system for the future. People and businesses will routinely and comfortably deal in this multiple currency system, just as we today use all kinds of value cards, air miles, vouchers, credit and debit cards and virtual currencies in the course of our lives.

The first tier of this monetary structure would be a ‘global reference currency’, which is not linked to nation states as such. This currency, which is what the Terra is supposed to evolve into, is there to provide a steady reliable type of money that can be used for international trade. The Terra will be based on internationally traded items like gold, copper, and wheat. It appears that Lietaer believes that this kind of new world currency could morph into being from various corporate scrips used in cashless trade between businesses today.

Apparently, in the US, 400,000 businesses are linked to about 700 barter exchanges, which results in $8.5 billion in cashless trade. It seems that this kind of trade rips along at 15% a year, three times the speed of dollar commercial exchanges.

A second tier in this monetary structure would be, for example, certain multinational currencies utilized by what would be deemed as geopolitically-close countries. This could include say the NAFTA dollar, the Euro, and an ASEAN (the 10-member Association of Southeast Asian Nations) currency.

On the third level, we have some remaining national currencies which run within or outside the multinational currency regions. But this time, individual states no longer have the monopoly in issuance of currency.

At the fourth level, we have CCs/new money as has been discussed. To Lietaer, these CCs could have an expanded role and greater influence, as they may be widely used and exchanged through community internet clearing houses. The Terra, as it is envisaged now, would have evolved from this category. What we need to look at in some detail is what the Terra is and how this may affect its future as a world reference currency.

The Terra is a CC that would be issued by a nation’s central bank. As outlined by Lietaer in his seminal “A ‘Green’ Convertible Currency”, what we will have is a “commodity-based currency, [for ] a…New Currency backed by a basket of from three to a dozen different commodities for which there are existing international commodity markets. For instance, 100 New Currency could be worth 0.05 ounces of gold, plus 3 ounces of silver, plus 15 pounds of copper, plus 1 barrel of oil, plus 5 pounds of wool.”

This CC/new money is therefore backed by the valuation of the commodities in the basket at the value of the national currency of the society it originates from. So in the US, the value of the basket, in terms of USD, will determine the exchange rate between those trading in USD for the Terra in America.

Once again, we need to understand that the Terra works in tandem with the national currency and is not a new money that supplants everything else in its wake. As the Terra TRC (Trade Reference Currency) White Paper by Takashi Kiuchi, Chairman of The Future 500, states:

“The Terra is designed as a complementary currency operating in parallel with national currencies. Therefore, everything that exists today as monetary and financial products or practices continues to exist. The Terra mechanism is only one additional option available for those international economic actors who voluntarily choose to use it.”

Of course, this may advance into the more generic realm of the four tiered monetary structure put forward by Lietaer. So the Terra would be used as a complement in international trade alongside national currencies. The idea being to not only provide an alternative, but wean nations away from relying on conventional currencies which are fiat money subject to the swings of money markets and the designs of central banks and politicians." (