Should U.N. make one currency for the world?

[size=14]Arguments for a global currency

Some of the benefits cited by advocates of a global currency are that it would eliminate several types of currency speculation, eliminate many direct and indirect transaction costs of currency trading, eliminate the risk of complete currency failure, and eliminate the misalignment of currencies.

Arguments against a single global currency

Some economists argue that a single global currency is unworkable given the vastly different national political and economic systems in existence.

Loss of national monetary policy

With one currency, there can only be one interest rate. This results in rendering each present currency area unable to choose the interest rate which suits its economy best. If, for example, the European Union were to have an economic boom while the United States slumped into a depression, this period would be eased if each could choose (whether by market forces or by fiat) the interest rate which best fitted its needs — in this case, a relatively high interest rate in the former, and a relatively low one in the latter.

Political difficulties

In the present world, nations are not able to work together closely enough to be able to produce and support a common currency. There has to be a high level of trust between different countries before a true world currency could be created. A world currency might even undermine national sovereignty of smaller states.

A currency needs an interest rate, while one of the largest religions in the world, Islam, is against the idea of paying interest for loans. This might prove to be an unsolvable problem for a world currency, if religious views concerning interest do not moderate. This is not necessarily a fatal flaw, however, as a large number of religious adherents who oppose the paying of interest are still currently able to take advantage of banking facilities in their countries which are able to cater to this. An example of this might be Islamic banking, which operates well enough in nations where the central bank sets interest rates for most other transactions.

Economic difficulties

Some economists argue that a single world currency is unnecessary, because the U.S. dollar already provides many of the benefits of a world currency while avoiding some of the costs.


If the world does not form an optimum currency area, then it would be economically inefficient for the world to share one currency.

A further argument is most easily conveyed by an analogy. Water carried in a biscuit baking pan will rapidly flow from high points to the lowest point, causing a sudden uncontrollable imbalance that forces the high points higher and the low point lower. The same quantity of water in cups on the biscuit pan will have no such inherent instability. Hegemonic currencies, free of regional limitations, flow rapidly away from high risk areas exacerbating their problems disproportionately to original causes. Such events are very damaging to the prosperity of the affected area. See for example the events leading up to, and subsequence consequences of, the Corralito in Argentina. For those with the power to do so, predicting, or even causing, such capital flights can lead to immensely profitable speculations; so profitable indeed that their likelihood of occurrence increases in proportion with the scale of the currency involved.k[/h]

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Thanks buddy.

I believe Nate just ended the thread in a single blow.