What if there was Only One Currency?
Why don’t we have one global currency? This question might have crossed your mind once or twice before, but economists and intellectuals have been dwelling on it for quite some time now.
Is it even doable? If yes, what would be the advantages and disadvantages of having one unified currency?
Historically, whenever stability and political ambitions exist in one place, powerful states seem to always attempt to impose their currency on others. All great civilizations in history, such as the British and Chinese empires, found the allure of having international trades under the control of their currency too tempting not to pursue.
A more strategic approach to merging monetary policies has emerged in the last century, with regional states finding common interests in sharing a currency. The most obvious example is the European Monetary Union, which delivered outstanding results until the last two decades. Other regional neighbors plan on taking a similar step, such as the East Africa Union and Gulf Cooperation Council. But why have there not been any serious efforts to introduce a global currency yet?
It would be unfair to assume that the lack of attempts to adopt an international currency is due to considering it useless. On the contrary, customizing a one-fits-all currency under a single regulatory union's authority can have incredibly transformative and revolutionary effects on every aspect of life, from trade, inflation rates, and money supplies to households and individuals managing their expenses. Yet, the world seems in no hurry to take any serious action. For as complicated a proposition it might sound, it is even more so in practice.
What benefits would we get from adopting one global currency?
Despite the complications, there are still vividly clear benefits of having a world governed by one currency. These include:
- Free trade will flow since additional charges on imports and exports will dissolve.
- Price manipulation such as devaluing national currencies for higher exports will halt.
- Inflation will no longer be a threat, especially for inflation-sensitive developing countries.
- Currency fluctuations will not exist, thus helping businesses better manage their funds.
- Currency exchange fees will be eliminated, and so will the middlemen and their expenses.
- Money will be better utilized with exchange fees being out of the picture.
- Competition will rise and consequently efficiency and quality of services.
What drawbacks would we get from adopting a global currency?
As you might have guessed, all the mentioned perks of having a global currency do not seem to seal the deal. So, what could be the disadvantages?
- Countries will have no power over their monetary policy like adjusting interest rates and mining bills.
- Polices will have different effects on different nations with dissimilar resources and consumption rates.
- Wages will vastly and unjustly differ depending on minimum wages in different areas.
- Big economies will show resistance in the face of losing their monetary autonomy.
- Smaller economies will suffer underrepresentation in making calls that directly affect them.
- Markets and businesses that rely on money and currency fluctuations will cease to exist, such as Forex trading.
- Few powerful nations will hold power over the majority of the world.
Finally, we cannot entertain the notion of adopting a universal currency without touching on cryptocurrencies. They provide attractive promises as potential global currencies with their immunity from monetary easing and price manipulation in addition to having fees-free transactions. With people worldwide starting to use Bitcoin more by the day, its transition into a unified currency is becoming more plausible, while government regulators sit beyond watching with little to be done.
However, without any significant official backing from governments, it would be tough for Bitcoin, or any other cryptocurrency for that matter, to succeed in this endeavor.
Do these obstacles close all open doors in the face of a future global currency? They might but hope still exists thanks to the ever-evolving technological advancements as the best currency system may yet be introduced, changing the way we think of money in every way imaginable.