1 of 13

No

Write now Article Tools

A single global currency makes the assumption that all of humanity has the same needs. Nations of the world have different priorities. How their currency is managed is a reflection of those priorities. Some governments pursue stability through high economic growth and employment while others seek a solid financial environment. Even if economic priorities were aligned a single global currency would fail without the prerequisite for the free movement of labour around the world. Unfortunately unlimited immigration in today's world of stratified wealth seems like a distant utopian future.

A currency that restricts the movement of labour inside its jurisdiction would not be sustainable. When Argentina pegged the peso to the U.S. dollar the conflict of the currencies objective and the country's needs became evident. Argentina's trading partners could lower their currency value, making their products cheaper (and people poorer), but keeping their citizens employed. Argentina pegged its currency to the strong U.S. dollar and its booming economy. Argentinean pesos could purchase more and more foreign goods, to the detriment of domestic employment. This would not have been a problem if the unemployed could migrate to the booming U.S. economy that reflected the strength of their currency. The idle hands turned into riots that lead to the removal of the peg and collapse of the Argentinean economy. A global currency would face the same challenge if people could not migrate between economies. Regions would disassociate from the currency to fulfill their domestic needs.

A currency can be managed to promote employment or to promote a stable financial system. A global currency would constantly face the choice of promoting growth by devaluing through inflation or promoting financial stability by keeping the integrity of the currency. Either decision holds the potential for disaster. Devaluing currency can lead to hyper-inflation, where confidence in the currency vanishes and a new standard is sought. Keeping the integrity of the currency can lead to high unemployment and unrest as exemplified in Argentina's experience. Who would decide which direction the global currency should take? If the choice is democratic then most of the world's population lives in developing economies with the priority of employment. The rich nations' wealth would be devalued in pursuit of economic growth in the developing world. If the global currency is idealistic and pursues integrity then a mismanaged

• 1
• 2
• next page >>

Add your voice

Know something about Could a single global currency work??
We want to hear your view. Write now!