Soros proposes way to fund to fight global warming

Reuters

"I've found a way for someone else to pay ... to mobilize reserves that are lying idle," Soros told Reuters on the sidelines of the December 7-18 conference that will end with a summit of 110 world leaders meant to agree a new climate pact.

Hungarian-born Soros said green loans to poor nations backed by International Monetary Fund gold reserves could total $100 billion.

"This $100-billion fund I think could just turn this conference from failure to success," he said, admitting there were several legal and practical hurdles to unlocking the cash.

From Soros' email annoucement:

In September 2009, the IMF distributed to its members $283 billion worth of SDRs, or Special Drawing Rights. SDRs are an arcane financial instrument but essentially they constitute additional foreign exchange. They can be used only by converting them into one of four currencies, at which point they begin to carry interest at the combined treasury bill rate of those currencies. At present the interest rate is less than one half of one percent. Of the $283 billion, more than $150 billion went to the 15 largest developed economies. These SDRs will sit largely untouched in the reserve accounts of these countries, which don't really need any additional reserves.

I propose that the developed countries--in addition to establishing a fast start fund of $10 billion a year--should band together and lend $100 billion dollars worth of these SDRs for 25 years to a special green fund serving the developing world. The fund would jump-start forestry, land-use, and agricultural projects. These are the areas that offer the greatest scope for reducing carbon emissions and could produce substantial returns from carbon markets. The returns such projects can generate go beyond reducing carbon; there will be non-carbon related returns from land use projects, the potential to create more sustainable rural livelihoods, enable higher and more resilient agriculture yields and create rural employment.

This is a simple and practical idea. There is a precedent for it. The United Kingdom and France each recently lent $2 billion worth of SDRs to a special fund at the IMF to support concessionary lending to the poorest countries. At that point the IMF assumed responsibility for the principal and interest on the SDRs. The same could be done in this case.

I am very curious about what it must be like to handle a major figure like Soros and one of my life's ambitions is to meet Michael Vachon.