Proposal would be funded by existing Special Drawing Rights

COPENHAGEN, Dec. 10 /PRNewswire-USNewswire/ -- Rich countries could double available funding to combat climate change by donating recently issued Special Drawing Rights to a new green fund.

This fund would jumpstart investment in low carbon energy sources, reforestation efforts, rain forest protection, land use reform, and adaptation programs.

"This is a win-win opportunity for developed and developing countries to work together," said George Soros, chairman of the Open Society Institute, in Copenhagen. "Since the funding is available now, it can have an immediate impact."

Unlike other proposed solutions, this plan could be implemented within already existing financial structures. SDRs, issued by the International Monetary Fund, essentially constitute additional foreign exchange. In response to the global financial crisis in September 2009, the IMF issued $283 billion in SDRs, with more than $150 billion going to the 15 biggest developed economies. This sits largely untouched in their reserve accounts, leaving a surplus that could be donated to the fund.

The IMF currently has 100 million ounces of gold, at current prices worth more than $100 billion at book value. The IMF has decided that the surplus value of its gold be used to benefit the least developed countries. Under this plan, the IMF would use its gold reserves to cover the interest incurred by the developed countries that donated their SDRs.

Paying the interest in this way would mean that developed countries would not be saddled with interest payments. In addition, the gold can also be used to guarantee the repayment of loans for the climate projects if the carbon market fails to develop as envisioned.

Soros said, "All that is lacking is the political will to fight global warming in the developing world by using the existing allocations of SDRs."

The Open Society Institute works to build vibrant and tolerant democracies whose governments are accountable to their citizens. To achieve its mission, OSI seeks to shape public policies that assure greater fairness in political, legal, and economic systems and safeguard fundamental rights. On a local level, OSI implements a range of initiatives to advance justice, education, public health, and independent media.

SOURCE Open Society Institute

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