The arguments for a global currency often include hyping how this Utopian currency would end national currency crises by eliminating the need for countries to maintain reserves of foreign currency as a hedge against market fluctuations.

They also tout the supposed virtues of how world equity markets would benefit by the stabilizing factor brought on by a world currency in international business transactions.

Ideally I suppose that those would be two results that could come about from a world currency; yet, how realistic is it?

Yes, people will mention the euro as an example of how different nations, with different languages and economies can adopt a single currency. True as this may be (although some, such as myself, see the euro more as a consolidation currency), I do not believe that it could be extrapolated to a worldwide context.

As much as technology has made the world a smaller place, individual nations, sometimes even those with close ties, can often have very divergent economic, social, and political agendas. Individual national currencies are often closely tied, for good or for bad, to the political whims and fortunes of each nation.

You then have the Islamic question. A world currency would require governance from some sort of international central bank. Most central banks use interest rates as the primary mechanism to guide monetary policy. How would monetary policy be guided when over 1/4 of the world population has a religious ban on the concept of charging monetary interest?

To me it seems as an ideal to be aspired to by academia, but one which the realities of the world would probably make unworkable.

It's not going to happen anytime soon.

The same issues would arise as when European Union countries were looking at moving to a common currency, but much more severely because around the world economies have much bigger differences than they do within Western Europe.

Those issues are basically:

On the plus side:

- It makes it easier and cheaper to trade. Apart from not having to pay for currency conversions, you also don't have to worry that when you do a deal you won't get as much as you expected because the exchange rate moved by the time you got paid.

- If your own currency and economy was not so well managed, being locked into something more stable might help

On the minus side:

- Monetary policy (things like interest rates) has to be same for everyone in the single currency zone, but their economies might have different needs at any given point in time

- One tool that allows economies to cope with shocks would be gone. At the moment booms and busts in one country can be moderated by the exchange rate going up and down in response

- To cope with shocks without that option you'd need things like the freedom for people to up and find work in another part of the world, or the nations that are doing well to give financial aid to prop up those in a recession. (The same as happens with regional decline within a single country).

- If your own currency and economy was exceptionally well-managed, pooling in with other countries might actually make things more volatile. Not too many countries have that problem, but it worried Germans before going into the Euro.

The problems might just about be soluble within a block of countries that have quite similar economies and strong cultural and political ties, like the core Eurozone countries. But even in Europe, the UK stayed out of the Euro because it is too different of an economy to some of the others, and has less enthusiasm for the poltiical ties that go with a currency union.

So until such time as we're in a Star Trek kind of world of global stability and unity, it's unlikely that a true global currency can come about.

There is already some what a global currency in gold, gold is exchange for goods, used to pay debt, it's value goes up and down like a currency, it can be safe haven for investor when there is economic uncertainties. it is accepted as international medium of exchange. but most of all it cannot be faked ,

To have a single global would be very vulnerable to counterfeiting.

its hard to say, I can see cheapgamers point but it also might eliminate the currency fluctuations that cause jobs to move in and out of countries and societies where there is high inflation and not really goes on as far as improving quality of life, I think maybe if properly managed it may actually allow for more stability and worldwide growth, where the best and brightest excel no matter where they live.

Don't we have that already ? , I thought it was called Paypal ? ;o)

http://i33.photobucket.com/albums/d98/ftwi89/2009-05-11_233638.jpg

On a more serious note....
Much like metropolitanization of a _county_ you will run into many issues with this. I think the ultimate goal here first (Like many have mentioned) is economic stabilization. And then shortly after another small step should be taken, (such as more countries starting to share landmass and global resources) . These small steps while just what they are (small), will then multiply into even greater milestones.

What we need more in this world is diversity & people willing to get their hands dirty.

Developing countries, such as Bosnia and Armenia and other emerging 3rd world countries, who are just slowly forming their economic infrastructure.
Would benefit greatly from a single note which could be used as a catalyst toward a even greater economy.

There are also great problems with this.

Such as other countries which choose not to adopt the global currency feeling ostracized. These countries should be given the chance to work just as hard toward merging a global currency into their current currency system.

The nations of NATO should give every entity in the world the chance to play a role in the design and statistical analysis of a formula in which a Global Currency could become a viable option.

I believe a Global Note would bring great precedence to the worlds goal towards continued economic stabilization.

Kind Regards,
@XDS

If unethical bankers can cause issues to a local economy, imagine what corruption in the world currency bank could do.

It's a horrible idea -- developing countries lose the capability to have a sound monetary policy.

Besides there is a global currency already, gold.

I just saw this article "The end may be near for the dollar " posted today, just after the best answer was selected. When the actual fall is going to occur is difficult to gauge, but the charts indicate a possible fall in the near term future. The US will resist with all its might, simply because of the advantages of dollar hegemony, a term coined by Henry CK Liu. I was too overwhelmed by the ramifications of this question, so I couldn't formulate an answer, but here are some sources I've been looking at.

duenhsiyen

Horrible idea unless you have a Global committee to decide on spending.
As we see in Europe some govts have a clearer idea of the word "budget" than others.

President Barack Obama and his top two economic officials on Tuesday dismissed suggestions by emerging economic powers that the world move away from using the dollar as the world's main reserve currency.

"I don't believe that there's a need for a global currency," Obama told a prime-time televised news conference, adding that the dollar is "extraordinarily strong right now".

The International Monetary Fund said earlier that the single global currency idea highlighted concerns about the stability of the global financial system, after both China and Russia earlier urged an overhaul of the global monetary system.

In a congressional hearing on Capitol Hill, U.S. Rep. Michele Bachmann, a Minnesota Republican, asked U.S. Treasury Secretary Timothy Geithner: "Would you categorically renounce the United States moving away from the dollar and going to a global currency as suggested this morning by China and also by Russia, Mr Secretary?"

Geithner replied, "I would, yes."

She posed the same question to Federal Reserve Chairman Ben Bernanke, who said: "I would also."

Chinese central bank chief Zhou Xiaochuan on Monday urged a wider use of Special Drawing Rights created by the International Monetary Fund as a global reserve asset in 1965.

Zhou's comments followed remarks by Russia last week which said it would put forward a proposal at a meeting of the Group of 20 in London on April 2 for the creation of a new global reserve currency.

Russia said its proposal had broad support among other key emerging market economies including Brazil, India, China, South Korea and South Africa.

Obama was asked during his news conference about concerns expressed by Chinese officials over the dollar, the growing U.S. budget deficit and the safety of Beijing's $740 billion holdings in U.S. Treasury debt.

He answered by saying that U.S. dollar strength reflected growing confidence in America's prospects and in steps taken by his administration to revive the economy and shore up housing and the financial system.

"The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world," he said.

"You don't have to take my word for it. I think that there is a great deal of confidence that ultimately, although we are going through a rough patch, that prospects for the world economy are very, very strong."

Australia's Prime Minister Kevin Rudd also knocked down the global currency idea, telling a Washington audience late on Monday that the dollar's position as the reserve currency remains unchallenged. I believe that once the peoples (including their corporations and labor and other organizations) of the world understand the benefits of a Single Global Currency, they will demand it from their governments. The Single Global Currency is what the peoples of the world need, and it is what they want.

The referenda in Denmark and Sweden for a common currency have failed because the people were not persuaded of the benefits of that particular common currency. A major reason why those benefits are restrained is that today's common currencies (euro, EC dollar, West African franc, U.S. dollar) still must function in a multi-currency world, and therefore must suffer the ills of the current exchange rate system. Once the peoples of the world see the significantly increased benefits of a Single Global Currency, even compared to the growing regional "common currencies", they will demand that their governments start planning for its implementation.A Single Global Currency would likely have a new name which denotes its global use, such as "mundo", "global", or "eartha", just as the "euro" is currently for EuropeIt likely would not be the expanded form of any current currency, such as the dollar or euro or yen, unless those currencies opened up their central banks' governing boards to worldwide participation and agreed to change the name of the currency to one with more global meaning.

With the use of a Single Global Currency, there would be no more need for expensive currency exchanges nor expensive hedges against currency fluctuations. Gone would be currency speculation and the risk of currency failures and balance of payment problems. Such a currency would therefore be more efficient as a means of conveying true value, without consideration of the political winds of the day. (See Why an SGC, and see our one-page FACT sheet.)

The Single Global Currency would be managed by a single global central bank, with representative governing boards for the people , governments and financial institutions of the world.

Implementing a Single Global Currency for international transactions AND as legal tender in participating countries, does not mean that other currencies cannot co-exist with such a Single Global Currency. When the euro was being planned, it was anticipated that the pre-existing national currencies would continue to co-exist. However, such a plan was deemed inefficient and it was decided to abandon the old national currencies. That was a decision made by the members of the eurozone members of the Eurozone and was not a mechanical requirement of monetary union. Within a global monetary union, and with a Single Global Currency managed by a global central bank, there may well continue to exist several pre-existing national currencies and other national instruments which might be called currencies, such as complementary currencies (e.g. frequent flier miles, Canadian Tire Dollars or Ithaca Hour Dollars)

The Global Central Bank would be financed by whatever benefits will come from the printing of money and seigniorage. Any surplus monetary benefits coming to the bank would be allocated to politically agreed-upon goals, such as the reduction of foreign debt or the eradication of disease or the support of family planning.

As it's thought by many economists that a Single Global Currency will be good for the people of the world and as many economists and non-economists expect a Single Global Currency "someday", why not obtain the benefits thereof sooner rather than later? It will surely benefit all the people of all the countries of the world if there is a Single Global Currency, just as it currently benefits California and Maine to be in the same monetary union with the U.S. dollar, and for Germany and Portugal to be in the European Monetary Union with the euro. Â "Let's start planning, NOW!"

Let's ask the thousands of economists who specialize in international monetary issues to study how the Single Global Currency will work and what is needed to implement it. Enough has been studied and written about how the current exchange rate systems do not give suffcient stability to the international finance system. "Let's start planning, NOW!" AND THAT IS HOW I FEEL.

This is f great idea. I wonder why it still did not happen. Principly, the experience of Europe with EURO shows benefits of using common currency.

I think this is not possible in this century yet=)... It would probably cause chaos from different countries and governments because a Global Currency would mean having one central bank to monitor and take charge over this and the question would then be - WHICH COUNTRY WOULD THE CENTRAL BANK BE IN? from that question alone i believe would already heat things up around the world not one of the so called Economic Giants would step aside without a good fight....=)

The data as a global currency