The world’s economy is dependent on currency. In a world of 257 countries, there are only 180 currencies available not including cryptocurrencies and precious metals and stones from gold, diamond, and other precious metals. As much as a lot of people do not know, the forex market is truly one of the major factors affecting the world economy but there are a lot of currencies flooding the market. Forex has a lot of problem especially when it has to do with exchanging, like converting Yen to Dollar, Cedis to Rands, Yuan to CAD and so on, so could there be a point were the world will be using a single currency as that looks like a preferable solution to the forex problem?
From using gold, cowries, seashells, and other means of transaction to fiat and then cryptocurrency, it has become an easy thing to trade internationally and locally but still why haven’t we started using the same currency worldwide. Using a single currency isn’t a new thing, from the days of using gold as a general means of payment, also the European Union has adopted the use of the Euro as their major currency.
Just as tech has improved so has the currency improved. From barter to the use of gold coin, coins, paper, and then electronic money. In all this, friction is the reason why a lot of countries do not trade with one another. Before the Euro became the central currency in Europe, it was difficult for European countries to do trade just like it is in most part of the world. The Italians wanted to use the Lira to trade even among European countries, the Germans wanted to trade with the German Deutsche mark and so do other countries wanted to trade with their native currency.
One problem with using different currencies worldwide is the use of currencies in international trade before payments. If a country agrees on a price with the buyer and seller having a currency value of 1:0.7 respectively and to be paid in the sellers currency, only for the value of the sellers currency to drop and the price becomes 1:1.2, this is where the comes to be a problem. Having a universal currency can solve this volatility problem.
What do you think about having a universal currency?
Do you think it will aid more trade?
Will corruption not be a problem with using a universal currency?
No. The Euro has been problematic because of the imbalances between the wealthier and less wealthy nations. The Dollar, which at present is almost universal currency, is problematic for nations that need dollars to pay debts. If anything, we are seeing that it is better to have multiple currencies that operate independently because troubles can be isolated to particular economies rather than spread out to other nations.
Similarly with crypto, none of them scales well. The best we can hope for is a multi-cryptocurrency market that spreads out the load. There are inefficiencies; but, it prevents problems from becoming systemic rather than isolated.
The problem I see with this single currency, apart from what it says @shainemata
It is that to be a single currency most states will disagree with being somewhat decentralized. And this being the reality, who could assume what that single world currency could be?
We well know what an institution like the International Monetary Fund or a central world bank can do in terms of economy, I don't know, it is an idea that could bring solutions to different problems but add others.
But it sounds good.
the problem with a universal language and a universal currency is what happens with the dollar the country power will seek to impose its market and its rules of the game, the centralization has shown that it is not good is better to try to improve the changes between currencies supported in gold