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With the recent advent of globalization, the spread of multi-national corporations, and the currency consolidation of Europe under the Euro, calls for a global currency have surged. However, these calls fail to adequately consider the worldwide political situation, and an official global currency would prove disastrous to the world economy.

The rise of the Euro versus the U.S. dollar is not an adequate argument for currency unification. Many countries pegged their national currencies to the U.S. dollar, and with the Federal Reserve's recent "weak dollar" policies, these nations and their economies are struggling. The U.S. dollar was justly the "gold standard" for currencies, as the American economy was the world's greatest and its currency the most stable. Recent monetary policies are reversing that trend, but that should be a call to arms from global currency supporters. The U.S. dollar, after all, has unofficially filled the role of global currency for decades.

The imbalance in global trade is not a situation that needs to be rectified. Instead, trade imbalances are the key regulator of worldwide allocation of resources in the global economy. Consider the case of, say, the U.S. and Japan. If America purchases cheaper Japanese TVs instead of American TVs, US dollars would flow to Japan. As more dollars enter Japanese currency markets, the value of the dollar would decrease against the yen (an increase in supply always decreases price). The higher price of the yen would increase demand for it, thereby increasing its price relative to the dollar, and increasing the overall cost of wages for Japanese works. Eventually, America can produce TVs cheaper than Japan, and the cycle starts again. Therefore, global trade imbalances are symptomatic of the regulation of national economies in regard to the global market.

It is important to remember that the global economy will not necessarily benefit from a standard currency throughout that economy. The vastly different economic situations throughout the world, largely linked to stock markets and monetary policies, are not conducive to a gentle integration. The European Union's temporary instability would be minuscule when compared to the fluctuations on a global level. Some developing economies may be set back years in their growth. Additionally, there is no global organization with the political clout to endorse and support a global currency. The creation of such an organization would meet with immense political opposition, making the establishment of said currency extremely unlikely. Claims that economic imbalance will create global economic chaos are greatly exaggerated, as the global economy shifts away from nations and towards international businesses. Imbalance is a necessary part of any economy, and a global currency will certainly not remove it.

In sum, there is no reason to pursue the implementation of a global currency when the U.S. dollar can fulfill the same basic function. Instead, political energies should be focused on convincing the U.S. Federal Reserve to pursue a fiscal policy that promotes a strong dollar in relation to other currencies, lest the dollar's stabilizing influence in the currency market be irreversibly removed.

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