Paul Davidson offers some ideas:
In the 21st century interdependent global economy, a substantial degree of economic cooperation among trading nations is essential. The original Keynes Plan for reforming the international payments system called for the creation of a single Supranational Central Bank. The clearing union institution suggested infra is a more modest proposal than the Keynes Plan, although it operates under the same economic principles laid down by Keynes. Our proposal is aimed at obtaining an acceptable international agreement (given today’s political climate in most nations) that does not require surrendering national control of either local banking systems or domestic monetary and fiscal policies. Each nation will still be able to determine the economic destiny that is best for its citizens without fear of importing deflationary repercussions and financial disruptions from their trading partners. Each nation, however, will not be able to export any domestic inflationary forces to their international neighbors.
What is required is a closed, double-entry bookkeeping clearing institution to keep the payments ‘score’ among the various trading nations plus some mutually agreed upon rules to create and reflux international liquidity while maintaining the purchasing power of the created international currency of the international clearing union. The eight provisions of the international clearing system suggested in this chapter meet the following criteria. The rules of the proposed system are designed
[1] to prevent a lack of global effective demand1 either due to a liquidity problem arising whenever any nation(s) holds either excessive idle reserves or drain reserves from the system, or a financial crisis occurring in any nation’s banking and asset marketing system spilling over to create liquidity and insolvency problems for residents and financial institutions in other nations.
