THEORETICAL PRINCIPLES OF REFORMING THE MONETARY SYSTEM: SUPRANATIONAL CURRENCY GES

Abstract

The current crisis of global finance is prompting the world community to search for ways to reform it. The focus is on the issue of building a qualitatively new international monetary system. In the context of this problem, the paper presents a project to create a supranational currency GES (Grain Equivalent Standard) based on the International Monetary Fund’s reserve asset SDR with the newly created currency tied to the value of the IGC (International Grains Council) standard commodity according to the Keynesian idea of the “standard value of a composite commodity” as the value basis of the monetary unit. Since the movement of the IGC grain market value follows the trend of the long-term value movement of the bulk of commodity products on the world market, the new monetary system involves, in fact, for the GES currency to be tied to the general price trend of the world economy, which guarantees its stability in terms of purchasing power. According to the project, the SDR money supply increased to the level of the total monetary base of national currencies in the world in dollar equivalent (currently $8.27 trillion) is distributed among countries based on the quota principle according to the size of their populations and is introduced into global market circulation. Having become an international money supply, the SDR is formatted by the world market, which is to determine the nominal value of the supranational currency. As soon as the true price of the IGC grain standard in this currency is revealed, the supranational monetary unit, renamed GES, is tied to the market value of the IGC grain standard weight and drifts with it in line with the long-term price trend of the global economy. This will ensure the stability of the currency in terms of its purchasing power in the long run, a guarantee of the stability of world finance. The GES supranational currency is completely autonomous (independent of the monetary policy of individual countries), is used as reference exchange rate for national currencies, and serves as a full-fledged means of monetary circulation in international economic relations.