10 of 13

No

Write now Article Tools

Page 2 of 3

of the world. Thus, companies and industries which survived the "shake-out" within the EEC have had the potential of protection aginst being undercut within their markets by non-EEC suppliers. The size of the EEC markets, larger than the American market, has enabled companies within the EEC to grow stronger by developing greater economies of scale.

However, the concept of a single global currency could force all companies to compete against all other companies, without any adjustment period. It could favor organizations with the global reach to take advantage of local cost advantages, such as exist currently in China and India. On the other hand, it could spell disaster for small companies that have enjoyed protected markets, due to national tariff and other trade barriers. The impact could be to accentuate the hallowing out of the American economy that has been seen with NAFTA and other free trade agreements. As with the EEC, those organizations which survive the shock of open borders and single currency tend to grow stronger, however if there is no protected home market as there was in the EEC, then economic turmoil can be dramatic and very controversial. Displaced unemployed workers could be mobilized by demagogues and spill into the streets. The greater the adjustments, the greater the pain and suffering and the greater the probability of demands for governmental policies to protect home markets.

The political dynamic implicit in democratic societies should be expected to impact significantly the international trade relations of the world. Thus, even in the unlikely event that all countries of the world agreed to give up their sovereign rights to control their currencies and monetary policies, by agreeing to a single currency and some unified system for administering it, there would be the fundamental issues of national borders and trade policies. In the case of the EEC, they avoided such issues internally by agreeing to common international borders and trade policies. That was possible due to having the large EEC market protected from the rest of the world by EEC trade policies at the EEC borders. If a single global currency were adopted uniformly as the Euro was within the EEC, then how to mitigate the adjustments for the displaced and the unemployed would be a central issue. Failure to anticipate such unrest could lead to political revolutions. Regions which felt unfairly disadvantaged by a single currency might form their own common markets for their

• << previous page
• 1
• 2
• 3
• next page >>

Add your voice

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