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Unification of Currencies a Plausible Reality?

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danielsan

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I recently stumbled upon this link below, discussing currency unification and its possible advantages.

With all the money worldwide traded in the forex markets you would think there would be considerable opposition to unification.

Could globalisation realistically bring about one unified currency, what are your thoughts?
 
It could, and is, argued that the consolidation of the European currencies into the Euro has led to problems with countries losing autonomy over their exchange rates.

A floating exchange rate acts like an economic buffer allowing a country with economic difficulties to have their currency devalued, and vice versa.

A falling exchange rate has a general effect the same as lowering interest rates. A rising interest rate has a similar effect to rising interest rates.

So Greece, Ireland, Portugal etc being joined at the currency hip of Germany does not allow for those individual regions to escape from having a high currency, which punishes exports and import substitution industries, hampering economic recovery efforts.

An interesting read is about early USA and how private banks would issue currency, it was only when the Federal Government wanted to start taxing people was it outlawed.

I am of the belief that having wider spreading currencies would be a bad thing.
 
Yeah, Its probably unlikely to happen, I reckon its pretty hard to get two or more country's to agree on anything, except perhaps going to war:

There would be a lot of forex traders looking for another market to trade though if it does ever happen.
 
All ready been done, the global currency used to be gold. Could happen again I suppose, but not in the near future.
 
As per the comments above, the Euro has shown how ridiculous it is to have countries with varying fiscal policies, varying cultures and vastly varying competency sharing a single currency and large aspects of monetary policy.
 
the collectivist approach to currencies, eg one world currency or regional eg euro, might seem very fair and efficient, but i think in reality its the opposite, trade is complex and obviously crucial to all economies, so countries need to have some wiggle room for when things arent going well, the idea of being increasingly locked in to the fortunes of other nation states just makes everyone more nervous imo
 
No, it's not plausible because as others said, the flexible exchange rates between different economies is a very powerful mechanism to help the macroeconomic(and micro) system stabilize.
 
Indeed, when you consider the differences between, for example, Tasmania and Western Australia, or Sydney and the bush, there's probably reason for Australia to have multiple currencies.
 
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