We can no longer deny the need for a global currency

The climate and Covid-19 crises show that our internal monetary system is failing – something must change soon, writes Phil Thornton

Economist John Maynard Keynes proposed a supranational currency called a ‘bancor’ in 1940 (iStock)

A global reserve currency, which was the brainchild of British economist John Maynard Keynes more than 80 years ago, may finally become part of the monetary system in the wake of Covid-19 and the fallout from the chaos in Afghanistan.

Keynes proposed a supranational currency called a “bancor” in 1940 that would act as a supranational currency in which all nations would settle their trade. The idea was vetoed by the Americans, who wanted the dollar as the reserve currency.

However, stresses on the financial system 50 years ago led the International Monetary Fund (IMF) to create an arcane instrument called the special drawing right (SDR). It is not in fact a currency but a reserve asset to help countries during financial crises. As Mark Plant, chief operating officer of think tank CGD Europe, puts it: “SDRs are promises, not money.”