by Rosemary Redfern

Created on: March 25, 2009

While an international currency would have many benefits there are some important factors to consider before it can be implemented.

Who is to be the governing body? How will they be appointed? Who will decide and where will these decisions be made; on what authority? Would each country need to have a referendum before joining?

The IMF is a useful model and has a Frenchman in charge at the moment. How would the leadership of an international currency organization be rotated? The individuals who are employed by this agency need to be linguists as well as financial experts. Details get lost in translation.

What will be the inducements for the entire collection of world countries to agree to this? When you consider the differences in philosophy and culture of the disparate nations there is plenty of work to do. How can each country be assured of the truthfulness, honesty and faith of the other countries and their representatives? The current world financial crisis has shown what happens when individuals become greedy and when checks and balances are not powerful enough. Will there need to be sanctions?

Where will this organization be based? It cannot be in a G20 country because less wealthy countries will feel they are being sidelined and be suspicious.

The controls which govern how the international currency is run will have to be agreed by everyone. Will, like Europe, all countries have to review their human rights behavior to join?

On the plus side, it would eliminate currency dealing and speculation. The man in the street would not be subject to the whims of interest rate fluctuations and presumably raging inflation such as Zimbabwe is suffering.

The euro is a useful example. Moving from country to country within Europe is easy; you need one purse for cash. For EU holiday makers it is simple, and EU businesses know what the costs of transporting goods and raw materials will be. They can work out their budgets with some confidence.

The current financial instability has made it difficult for businesses and individuals who deal with the pound, the dollar and other currencies. There is uncertainty about how much these currencies are worth for trading and pensions. Financial planning is difficult.

A big issue for the euro is that the countries who use it, have had, and are experiencing varied economic conditions. For some it is difficult to stay within the financial rules set by Brussels. Partly because some countries have expensive medical and social care programs which, morally, they wish to maintain. Economic conditions within the
EU vary and this stimulates emigration. How much freedom will the countries have in determining how they make their budgets?

Countries like Britain, who have maintained their own currency, have been able to act to control it. However, this makes trading with the rest of Europe uncertain because of the fluctuations in currency values.

Finally, many people have an affection for their own currency. Some Europeans found it hard to change to the Euro. Many countries still show the prices in their original currency as well as the euro. The idea has certain attractions but would be difficult to implement.

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