Dealing with Debt Overhang and Climate Change
Ahmet Öncü and T. Sabri Öncü
Abstract
Inspired by the German
Currency Reform of 1948 and the 'Modern Debt Jubilee' proposal of Steve Keen,
we recently proposed a globally coordinated orderly debt deleveraging mechanism
with a climate component to address the global debt overhang problem. We
discuss why the global debt overhang and lack of sufficient climate finance
flows are interconnected, and how our proposed mechanism may help to improve
the situation. Our proposed mechanism consists of three national authorities
coordinated globally. They are the Deleveraging, Lastenausgleich (equalisation
of burdens), and Climate Authorities. The Financial Stability Board (FSB), the
United Nations Economic and Social Council (UN ECOSOC), and the United Nations
Framework Convention on Climate Change (UNFCCC) may coordinate these authorities,
respectively. Indeed, the Green Climate Fund already existing under the UNFCCC
could become the global coordinator of the national climate authorities. For
the equalisation of burdens, the global coordinator of the national
Lastenausgleich authorities should consider the creation of a central database
on worldwide ownership of financial assets, that is, a "global financial
register," Thomas Piketty and Gabriel Zucman have proposed.
