The US dollar has plummeted against all major world currencies. The South African rand has fallen against the weak dollar. These are cause of concern to the financial stability of the world.
A single global currency could be the answer. The success of the Euro in the EU has proven that a common currency can and does work within member states, and it helps to promote financial stability.
Imagine being able to use the same currency in every corner of the globe! Imagine current account or balance of payment problems becoming a thing of the past. It is possible. In a recent article, Global Finance magazine examined the possibility and benefits of a single currency. Worth a look.
Below is a fact sheet from the Single Global Currency Association.
A Single Global Currency - Common Cents for the World
P.O. Box 390, Newcastle, ME 04553, USA 207-586-6078
www.singleglobalcurrency.org morrison@singleglobalcurrency.org
"A global economy requires a global currency."
(Paul Volcker, former U.S. Federal Reserve Chair.)
FACT SHEET
PROBLEM: The world's complex multicurrency foreign exchange system is a costly and destabilizing burden to the world's economy. The exchanging of $3.2 trillion daily among 141 currencies costs the world approximately $400 billion dollars in transaction costs and $trillions in the undervaluation of assets. The multicurrency monetary system is an “absurd system,” according to Nobel Prize winning economist, Robert Mundell, and should be replaced.
SOLUTION: A Single Global Currency managed by a Global Central Bank, within a Global Monetary Union as early as 2024, the 80th anniversary of the 1944 Bretton Woods Conference.
BENEFITS (from the back cover of the book, The Single Global Currency - Common Cents for the World)
- Annual transaction costs of $400 billion will be eliminated.
- Global currency imbalances, including all balance of payment issues, will be eliminated.
- Currency crises will be prevented.
- Currency fluctuations will be eliminated, as will be the opportunity for speculation.
- International trade will increase.
- Worldwide interest rates will be reduced due to the elimination of currency risk.
- Worldwide asset values will increase by about $36 trillion.
- Worldwide GDP will increase by about $9 trillion.
- The need for foreign exchange reserves (currently about $6 trillion) will be eliminated.
Such gains are realistic and attainable if the world decides to pursue them. The monetary unions of Europe, the Caribbean, Africa and Brunei/Singapore have shown the way.
THE ROUTES TO IMPLEMENTATION:
- Continue to expand the scope of existing monetary unions, especially the euro.
- Create new monetary unions, e.g. Gulf Cooperation Council, West Africa Monetary Zone.
- "Ize" national currencies to any major currency, as in "dollarize","euroize" or "yenize".
- Create a prototype Global Central Bank as an affiliate of an existing international financial
organization, such as the IMF, World Bank or Bank for International Settlements and invite
countries to "ize" their currencies to the currency issued by that Central Bank. Participating
countries would then form the prototype Global Monetary Union, which would then expand
and merge with other monetary unions.
- Convene international monetary conferences for nations, people and organizations to plan for the
implementation of the Single Global Currency and the structure of the Global Central Bank.
- Encourage economic research and writing about the Single Global Currency.
- Increase worldwide public awareness of the Single Global Currency as the only
long-term solution to the problems of the obsolete multi-currency monetary system(s).
- Establish sound, stable money as a fundamental human right as is the right to own property.
Showing posts with label Single global currency. Show all posts
Showing posts with label Single global currency. Show all posts
Monday, 24 March 2008
Monday, 17 March 2008
Can a single global currency work?
A single global currency has a few advantages over the current system of 190 separate currencies in circulation in the world. The first of these is that it would eliminate huge volumes of global currency trading and the considerable costs associated with this. Currency speculation which has at times resulted in quite spectacular currency fluctuations would become a thing of the past. Of course it follows that currency fluctuations would end. It can also be expected to bring about greater stability to world trading conditions.
The European Union - or EU - has taken the lead towards a single currency. Amidst much controversy, the Euro was adopted as the currency of many EU countries. It has proven that a single global currency can work - at least at a regional level.
All is well as long as the countries are able to live and trade with each other. What would happen if one of these countries experienced a rogue government intent on world domination?
The concept of a single global currency is not really that new. The gold standard until World War One meant that all currencies were linked to gold. Gold was therefore the real global currency. Until 1971, currency rates were fixed. The pound sterling had a fixed relationship to the dollar, the yen, the fanc and so on. These fixed exchange rates may have been artificial, but they certainly help to maintain stability and predictability when it comes to international trade. In 2001, the South African rand suddenly lost almost 60% of its value against the dollar. Exporters had a field day, but the cost of imported goods soared. By early 2002 the rand had recovered all of its losses. A very unsatisfactory situation for business that are tied into agreements with foreign suppliers and customers.
A single currency is working in Europe where over 500 million people either use it directly or have currencies that are pegged to the Euro. Over 400 million Americans use the US dollar, and millions more around the globe rely on the dollar as a benchmark to price goods and services.
Of course there are problems associated with the concept of a single world currency. The first is the lack of stability in the world. How can you find agreement between countries that are at war? Weaker economies may feel that they are being dominated by the rich and powerful.
Europe has managed to implement its own central bank. But a World Central Bank is much more complex. The result could be one of US hegemony, where other countries all play second fiddle.
One of the major drawbacks of a world currency is that it limits the ability of individual countries to control interest rates. Pressure to reduce rates in the US or EU would override an individual country's need to increase interest rates.
Implementing a single global currency may in fact be similar to bringing back the gold standard. Gold then becomes the standard unit, but each country has its own linked currency. The gold standard could be the better way to achieve a global currency as it allows each country to determine its own monetary policies.
The Euro has provided an indication that a global currency can work. The Euro has been a major success for the EU. Many forecasters of doom have been silenced on this issue - or perhaps the problems are still to come?
An organisation that is actively promoting a Single Global Currency is the Single Global Currency Association. Have a look at the site and read the book. The arguments for a single currency are compelling.
The European Union - or EU - has taken the lead towards a single currency. Amidst much controversy, the Euro was adopted as the currency of many EU countries. It has proven that a single global currency can work - at least at a regional level.
All is well as long as the countries are able to live and trade with each other. What would happen if one of these countries experienced a rogue government intent on world domination?
The concept of a single global currency is not really that new. The gold standard until World War One meant that all currencies were linked to gold. Gold was therefore the real global currency. Until 1971, currency rates were fixed. The pound sterling had a fixed relationship to the dollar, the yen, the fanc and so on. These fixed exchange rates may have been artificial, but they certainly help to maintain stability and predictability when it comes to international trade. In 2001, the South African rand suddenly lost almost 60% of its value against the dollar. Exporters had a field day, but the cost of imported goods soared. By early 2002 the rand had recovered all of its losses. A very unsatisfactory situation for business that are tied into agreements with foreign suppliers and customers.
A single currency is working in Europe where over 500 million people either use it directly or have currencies that are pegged to the Euro. Over 400 million Americans use the US dollar, and millions more around the globe rely on the dollar as a benchmark to price goods and services.
Of course there are problems associated with the concept of a single world currency. The first is the lack of stability in the world. How can you find agreement between countries that are at war? Weaker economies may feel that they are being dominated by the rich and powerful.
Europe has managed to implement its own central bank. But a World Central Bank is much more complex. The result could be one of US hegemony, where other countries all play second fiddle.
One of the major drawbacks of a world currency is that it limits the ability of individual countries to control interest rates. Pressure to reduce rates in the US or EU would override an individual country's need to increase interest rates.
Implementing a single global currency may in fact be similar to bringing back the gold standard. Gold then becomes the standard unit, but each country has its own linked currency. The gold standard could be the better way to achieve a global currency as it allows each country to determine its own monetary policies.
The Euro has provided an indication that a global currency can work. The Euro has been a major success for the EU. Many forecasters of doom have been silenced on this issue - or perhaps the problems are still to come?
An organisation that is actively promoting a Single Global Currency is the Single Global Currency Association. Have a look at the site and read the book. The arguments for a single currency are compelling.
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