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Robert Shiller, in his The New Financial Order: Risk in the 21st Century, spent a number of pages on the concept of Indexed Unit of Account. He realized that there does not exist anything naturally that has the most important quality to serve as a monetary anchor. The challenge then is to design a synthetic unit of account that represents a unit of stable global purchasing power. Trade, contracts, as well as commodity trading and bond issuance can then be denominated in this unit. A unit of account, however, is not money. Settlement will need to be carried out in a currency. The use of an international unit of account complemented with currencies that are in the same footing once and for all settles the Triffin Paradox. Robert Triffin notes that the supply of liquid USD-denominated assets which the world’s central banks use as reserves, depends on the US running current account deficits, but growing external debt undermines confidence in the USD. Today no other currency can challenge the supremacy of the USD because no other country has such massive external debt. A synthetic indexed unit of account is key to building a fairer, inclusive, and sustainable international monetary system.

Recommended Citation

Ho, L. S. (2023). Toward a new international monetary order: How a synthetic unit of account can lead to an inclusive international payment regime (PSEI/CERP Working Paper Series). Retrieved from