As we begin this blog, I revert my thoughts back to a time and a place. The time is midnight in the summer of 2014 and the place is my bedroom in Vineland, NJ. As I sat in my bed, I was conversing with one of my old friends, Ricky. Ricky was a philosophy and foreign policy major in university. During this evening’s conversation, we were discussing foreign policy and money. Before we discussed foreign policy, we began a dialogue about the foundations of aid to those on welfare and disability. He believed that the church and other non-profit institutes should provide financial and medical aid to those individuals on welfare and disability. I happened to disagree, I told him it was the government’s job to provide for the welfare and common good of the people in which they represented. My oldest sister was on disability with serious medical conditions so the topic was near and dear to my heart. Although we simply disagreed with one another’s views, we both understood and valued the viewpoint of each other. As the conversation progressed, we began discussing foreign monetary policy. We both agreed the world was in need of a unified global currency. The concept of a global currency would solve so many problems, but we both agreed it would take decades before this dream could come to reality. Here is my story of the pro’s and con’s to a One World Currency.
Although a single unified global currency is far from being implemented into global economic and political policies, it is something that we should strive for in the coming century if not decades. We begin this dialogue by discussing the potential pros of such a scenario. First and foremost, it would eliminate the need to exchange currencies or worry about fluctuating exchange rates. Secondly, international businesses could save billions of dollars in transactional costs and hedging against currency volatility. Current global FX, or foreign exchange, markets handle seven trillion dollars daily, even a small cut in these costs by means of a global currency, could cut costs by the billions In addition, a unified global currency that is well managed might reduce currency crisis caused by sudden devaluations or speculative attacks on one specific currency like we see today. In the long term, it could promote long-term investment flows as investment would be done with the same currency globally. In terms of transparency and fairness, countries couldn’t manipulate exchange rates to gain trade advantages. Furthermore, price comparisons worldwide would be straightforward, fostering more competition between local and global markets eliminating the need for tariffs to bring back jobs and manufacturing to the local country or region. Global competition would lead to lower prices for consumers in theory. In the end, it would lead to a more synchronized global economy and marketplace.
Just as a unified global currency has its advantages, there are many pitfalls to such a concept. First and foremost, especially in America, this would come at a loss to national sovereignty and monetary policy. Central Banks like the Federal Reserve system in America use their own currency to respond to local conditions like raising or lowering interest rates to meet the current economic climate or printing money during economic crises. A global currency would strip a nation’s ability to respond to economic crises during recessions or economic shocks. In addition, due to the imbalances in global economies, many countries are at different stages of economic and industrial development. As a result, the need for different monetary policies becomes apparent. Subsequently, a unified global currency might benefit richer countries more often than not. The next set of challenges comes down to trust and governance. Who would control the global central bank? How could smaller or less wealthy countries be represented fairly leading to disputes and political tension amongst the nations of the world. Governments would still have their own budgets and debt levels, so without control of monetary policy, debt crises could spiral
In the end, a unified global currency is many moons away from actualization. What is needed for such an idea to come to fruition is more synchronization amongst nations of the world, political stability, fiscal discipline, and global cooperation. Because of such factors, I am skeptical if such means are attainable. Due to global instability, a global unified currency lay on the back-burner for now, but I believe as the world comes to an equilibrium industrially and economically, a centralized global currency would benefit all.
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