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would be as safe and as effective as gold, and far more convenient.

IN SOME FORM THE OLD ORDER STILL CONTINUES

Many feel that a modern Bretton Woods system is in place even today. Asian countries, specially China have linked their currency to the US dollar in a way that it has been at the center of the Monetary universe, minus the advantage of seignorage. Thus countries like China achieve two goals with one stroke - interconnecting their economy for the purpose of international trade with US and the rest of the world, by having a currency that is strongly linked with US dollar; AND keeping their sovereignty, monetary autonomy and seignorage benefits. It is like having the cake and eating it too. Only, it comes at a cost in some other form - a persistent danger to the global economy.

As is seen with the creation of Euro zone, the challenges of single global currency will be more of political nature than economic. This is a very important finding, with many crucial manifestations. Single global currency can become a reality only in a world free from international conflicts. Its adoption will depend upon the urge of the global community to integrate national economies together, and will survive only if resistance to globalization and its adverse impacts are adequately managed and kept under wraps.

SUMMARY

The currency that may get accepted in the world as a global currency will also depend on the global power balance. Till a decade ago, US dollar would be the only candidate. But now Euro may be an equal if not more acceptable competitor. A greater likelihood is the fact that the single global currency in future will be a new currency, probably a basket of many different currencies of the world.

Irrespective of whichever currency of today or tomorrow may become the single currency of the world, one thing is certain. The new currency will be as much of a credit currency, as a paper currency. This could make the adoption of single global currency far more easier than most expect it to be.

If you have doubts, take the example of something like paypal - suppose it manages the account in a basket of currencies, instead of US dollar, and gives it a name, and that currency basket becomes acceptable by financial institutions, it will become acceptable by international traders too - a situation not very different from single global currency.

The future of single global currency is definitely there, and that future is not too distant from today.

Learn more about this author, V. Kumar.
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