Global Currency?

The world, whether we like it or not, revolves around money. Take a look at the underdeveloped countries and the developed ones. The major difference is usually living conditions, which inevitably circle back to money. So the question arises: “Why not have a single global unit of currency?” I’ve had the thought before but, as humorously as it seems, Stephen Colbert’s show from last Thursday caught my attention. He talked about the US joining the EU, which is quite a bit different than what I’m talking about now. However, it does pose an interesting debate. So that being said, and before I get into my details, I want you all to know that this has been brewing in my mind for only a few hours now. In other words, I’m not an economical or political or any kind of expert. This is just a simple citizen’s perspective and findings on the matter.

So let’s start with the Pros:
First of all, there are roughly 190 different currencies in the world. Simplifying that down to one create far less of a hassle.
There would be no real national currency crisis. Our (the US) economy is in the shitter. There’s no way around that anymore. A Global Currency that is mandated to keep inflation low would boost our economy as well as keep it somewhat stable in the future.

Now the Cons:
If, for some reason, there was an economic slump in one specific country, that country could not use their monetary system to adjust for it.
Also, I’m sure there would be significant protests from some American (any maybe other) citizens that wouldn’t want to trade the dollar, the dollar that they’ve used their entire life, for something new. Another problem would be how it would be governed. How would it work? What would effect these prices?

Obviously there would be some things that would need to be known internationally for this to work, but systems like this have been popping up all over the world in recent years. Most notably is the Euro. But there are other places doing this too. The Caribbean Community (most of the islands in the Caribbean along with some South American countries), the East African Community (Burundi, Kenya, Rwanda, Tanzania, Uganda), West African Monetary Zone (Gambia, Ghana, Guinea, Nigeria, Sierra Leone, possibly Liberia), and ASEAN +3 (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam, People’s Republic of China, Japan and South Korea) all have a proposed currency. There are even talks of Mexico, the US and Canada to share a similar currency. These would be a great way to get the world started on something that could be an eventual possibility.

So what are your thoughts? I’m sure you’ve thought about it before, and if not, well here you go. If you have any other knowledge on the matter, or just simply want to state your opinion on it, please comment.

____________
Sources:
Are you ready for a global currency? by David R. Francis (a bit outdated, but the basis for most of my info)
‘Currency’ Wikipedia article
‘United States dollar’ Wikipedia article
‘Euro’ Wikipedia article

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One Response to “Global Currency?”

  1. morrisonbonpasse Says:

    The success of the euro has shown the world that monetary union is a solid foundation for monetary stability and the optimal monetary union will be a Global Monetary Union. The euro is likely to be the core of the Single Global Currency in such a monetary union, not because it’s superior to the U.S. dollar, but because it’s managed for many countries rather than for one country.
    The Single Global Currency Association promotes the implementation of a Single Global Currency, within a Global Monetary Union and managed by a Global Central bank, by the year 2024. With the successful use of the euro and other common currencies, more and more people and organizations and nations are seeing the advantages of monetary unions. Our website is at http://www.singleglobalcurrency.org.
    The Association recently published the 2008 Edition of my book, The Single Global Currency – Common Cents for the World. A copy of the 2007 edition is available at the Munchen personal archive at http://mpra.ub.uni-muenchen.de/5879/. and on the Association’s website.
    The goal of 2024 is only 16 years away. If one looks at the world before the 2002 distribution of the euro to the people of the EMU, you would have seen in 1986 a Europe with a Soviet Union, an East Germany and a Berlin Wall. At that time, most Europeans would have scoffed at the idea of a new monetary union.
    The benefits of a Single Global Currency include:
    – Zero transaction costs to exchange currencies. Presently, $3.2 trillion is traded every trading day and all this trading and its associated costs, approximately $400 billion annually, can be eliminated.
    – The end of currency fluctuations and currency speculation.
    – The end of “Balance of Payments”, “Current Account” and “global imbalances” problems for currency areas. There will, of course, still be trade and wealth inequalities, and more visibly; but they will not be compounded by the problem of foreign exchange transactions and reserve requirements. There would be no need for countries to maintain international reserves of other currencies.
    – Zero manipulation by countries of their currencies, and thus no more need to cajole and jawbone any particular country or currency area about the value of its currency.
    – Zero risk of national and regional currency crises such as occurred in the 1990’s in Mexico, Argentina, Malaysia, South Korea and Russia.
    – Minimal inflation, assuming that the future global central bank sets and achieves a low inflation rate, just as the European Central Bank has done. It’s not clear that a zero inflation rate can be secured, as that would bring an economy perilously close to deflation and a deflation spiral, but certainly a low rate of inflation would be better for the world than the current rates.
    – Worldwide asset values will increase by about $36 trillion due to the elimination of currency risk. Such an increase in asset values will cause annual worldwide GDP to increase by about $9 trillion.
    – With no currency risk, worldwide interest rates would be lower.
    – With zero risk of currency failure and zero manipulation and minimal inflation, the Single Global Currency would satisfy the moral obligation that a stable currency should be considered as a fundamental human right, as is the right to own property. A Single Global Currency would be far more stable than the currencies presently used by billions of human beings
    While all these benefits are expected upon the implementation of a Single Global Currency, considerable benefits will also come during the implementation processes which will see the reduction of national currencies as predicted and welcomed recently by Benn Steil in Foreign Affairs.
    Of course, not all economists agree with the goal of a single global currency. For those who would label the single global currency utopian, we call their attention to the euro, which began as a plan only about 30 years ago. Who would have thought in the 1970’s that Europe would not only adopt a common currency, but also that its member countries would discard their old currencies?
    The single global currency might be an enlarged transformation of one of the current major currencies (dollar, euro, yen), perhaps with a new name such as “dey”, “eartha”, “geo”,”globo” or “worldo” or it might be a new currency with such a name. How we get to that point is, of course, a major challenge, but there are several possible routes. One is to continue the trend of creating and expanding regional monetary unions, and then combine those monetary unions into one. Another is for smaller countries to continue to “ize” their nations’ legal tender, as in “dollarize” and “euroize”, as has been done in El Salvador and Monaco. Compatible with all these and other routes is the need to convene an international monetary conference of nations, monetary unions and related organizations, and begin planning for the implementation of a single global currency.
    Organizations such as the IMF and the Bank for International Settlements, and individual economists should begin to carefully research and write about the benefits claimed above for the Single Global Currency, and about the costs, too. When the vast benefits become better known, the people of the world will demand a Single Global Currency and ask why we have been burdened so long with the existing multicurrency system, which Nobel Laureate Robert Mundell describes as “absurd.”

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