Financial Innovations and Monetary Reform: How to Get Out of the Debt Trap

Foreword by Jacques de Larosière
Foreword by Raphaël Douady
Acknowledgments
Introduction: Monetary Representation and Economic Reality
Contents
About the Authors
1 Short History of Money from Antiquity to the Twenty-First Century
	1.1 The Origins
	1.2 Caesar and Augustus: Legal and Financial Reforms
	1.3 The Last Turn to Modern Money: The U.S. Default on Gold in 1971
2 The Evolution Toward Modern Money and the Path Toward Digital
	2.1 Money and Accounting Are Closely Linked
		2.1.1 Financial Statements: Defining the Real World and the Financial Universe
		2.1.2 The Real World and the Financial World
		2.1.3 The Basis for the Expression of Today’s Money
		2.1.4 Stock Markets Influence Financial Statements; Monetary Transmission
		2.1.5 One Global Language, Accounting
	2.2 The Uniqueness of the Transcription of Exchanges
		2.2.1 The Principle of the Double Part
		2.2.2 The Principle of the Annual Exercise: Integrate the Time Factor
	2.3 Accounting for Liabilities
		2.3.1 Accounting for Financial Instruments at “Fair Value” (Addressed by IFRS 9)
		2.3.2 A New Vision of Accounting in a New World
		2.3.3 The Shortcomings of Accounting
		2.3.4 Lessons Learned from the Uncertainties of Reading the Books
3 The Current Model, the Role of Central Banks
	3.1 The Interaction Between the Real World and the Financial World
	3.2 The Traditional Role of Central Banks
	3.3 The Issue of Profits and Taxation
	3.4 The New Positioning of Central Banks
	3.5 Central Bank Accounting and Data
	3.6 Functions and Tools of Central Banks
	3.7 The New Crisis
	3.8 The Transmission of Monetary Policies to the Non-Financial World
	3.9 Rates and Volumes Are the Key Tools of Central Banks’ Monetary Policies
	3.10 Risk Borne by Central Banks
	3.11 The Relationship Between the Real World and the Financial Universe from the Point of View of Transaction Monitoring by the Central Bank
	3.12 Disconnections Between the Real World and the Financial World and Leaks in the Information System
	3.13 Reducing the Scope of Central Bank Action
	3.14 The Monetary Aspects of Distribution
4 The Monetary World and Its Analytical Tools
	4.1 Exchanges Are the Source of Monetary Instruments
	4.2 Update on the Coherence of Currency Spaces and Its Consequences
	4.3 The Transformation of the Monetary World
	4.4 The Monetary Unit
	4.5 Distinctions of the Medium, the Standard and the Blockchain
	4.6 The Stamping and the Standard
	4.7 The Right to Issue a Standard
	4.8 The New Approach of the Bank for International Settlements (BIS)
	4.9 Conceptual Discussion for an Expanded Monetary Approach
	4.10 The Necessary Development of the Observation of the Single Financial Space
	4.11 M5 and M6: Derivatives and Separation Between Instruments
	4.12 The Landscape of Exchanges Through M5, M6
	4.13 Analytical Objectives of Exchange Rate Observation
	4.14 The Classification of Instruments
	4.15 Exchangeability Between Instruments
	4.16 The New Paradigm
	4.17 The Power of Seigniorage and Its Challenges Today
	4.18 A Formula Test: STD (Serval, Tranié, Douady)
5 The Monetary System, the Issues
	5.1 What Does the Word “System” Mean When It Comes to Money?
	5.2 Description of the Existing System
	5.3 System Foundations—Independence and Sovereignty
	5.4 Central Banks at the Base of the System
	5.5 The American Federal Reserve Bank’s Objectives
	5.6 The Central Bank of the European Union “ECB”
	5.7 The People’s Bank of China (PBoC or PBC)
	5.8 What Does Central Bank Independence Mean?
	5.9 International Monetary Institutions
		5.9.1 The International Monetary Fund (IMF)
		5.9.2 The World Trade Organization (WTO)
		5.9.3 The Bank for International Settlements (BIS)
		5.9.4 The Main Institutions Involved in Transnational Lending
		5.9.5 The World Bank Group (WBG)
		5.9.6 Regional Development Banks
		5.9.7 Issues to Be Discussed for the Implementation of a Renewed Monetary System
		5.9.8 Financial Market Infrastructures (MFIs)
		5.9.9 The G20 Distinguishes Three Categories of Infrastructure
		5.9.10 Attempts to Propose Alternative Solutions to Risk Concentration
		5.9.11 An Extended Stabilization System from the CCPs (Central Clearing Counterparty) Could Be Considered
		5.9.12 Topics Not Yet Adequately Addressed by Monetary or State Institutions
		5.9.13 International Coordination, from G7 to G20
		5.9.14 The Current Situation
		5.9.15 The Financial Stability Board (FSB): The Necessary “Strange Animal”
		5.9.16 Toward a New World
		5.9.17 Intermediate Synthesis
6 The Monetary Reform, Its Stakes and Its Modalities
	6.1 The Standard as the Central Issue of a Renewed International Monetary System
		6.1.1 Why Would a Clear Separation Between the Unit and the Support Be a Positive Step Forward?
		6.1.2 How to Protect the Inviolability of the Standard?
		6.1.3 What Exchange Rate Parity with Other Currencies Should Be Adopted?
	6.2 The Objectives of Monetary Reform Within the Framework of an International Treaty
	6.3 What International Conference? Leadership Requirements, Participants and Transition Process
	6.4 The Rise of the FSB
	6.5 The G20 as a Political Leader for International Coordination
	6.6 Technical Skills: BIS and IMF
	6.7 The Role of Central Banks Needs to Be Redefined
	6.8 The Place of Companies in the New Monetary Framework
	6.9 OECD Governance
7 The Reduction of Public Debt, the Heart of a Monetary Reform
	7.1 Possible Ways to Reduce Debt
		7.1.1 The First Path: Provoke the Reduction of the Value of the Instruments by the Rise of the Rates
		7.1.2 A Second Path to Debt Reduction: Organized Debt Clearance
		7.1.3 The Third Way: Converting Debt into Equity
	7.2 Implementation of a Public Debt Reorganization Scheme
		7.2.1 Debt Reduction Process in the Western World
		7.2.2 Feasibility of the Exchange Project for Western Countries
		7.2.3 Reminder of Some Basic Data
		7.2.4 Principle of the Transformation of Public Debt into Investment Securities
		7.2.5 A Major Entrepreneurial Project at the Heart of a New Economic Paradigm
		7.2.6 A Dynamic Process to Build
		7.2.7 The Transformation Process
	7.3 A—The General Dimension of the Project
	7.4 B—The Debt Transformation Process for the Eurozone
		7.4.1 Creation of a Hive-Off Fund Called Transformation Fund or “TF”
		7.4.2 The Exchange of Acquired and Subscribed Shares for Debt
		7.4.3 Neutralization of Public Debt by Allocation of Securities Representing Investments
		7.4.4 Joint Commentary on the Taxation, Trading Process and Legal Status of Trading Rights in Projects
		7.4.5 The Specificity of the Exchange Scheme
		7.4.6 An Unavoidable Transformation
	7.5 C—The Process for the US Dollar Zone
		7.5.1 A Realistic Global Objective
		7.5.2 The 60% Cap
	7.6 D—Countries that Do Not Have Monetary Autonomy (So-Called Peripheral Countries) and Asian Countries that Together Form a Fast-Developing Zone
	7.7 E—Project Availability, Side Effects and Common Currency Issues
	7.8 F—Common Success Factors, Coordination and International Aspects: Moving Toward a Multilateral Monetary World
		7.8.1 The Conditions and Challenges of a Successful Transformation Plan
		7.8.2 The Deployment of the Device and its Requirements: No Speculation
	7.9 Conclusion
Conclusion
Appendices
	Appendix A: The HTDA Project to Track Exchanges in a New Digital Monetary Universe
	Appendix B: Glossary
	Appendix C: List of Central Monetary Institutions
Bibliography