Question

Will we ever have one world wide currency? Explain why you think this may or may not happen.

Answer 1

Answer- Global currency refers to the currecy that is globally used by people for transactions and thus, as a medium of exchange. But having a global currency is not as easy as it looks, it may have many disadvantages and that is why it is not preferred to have one currency world wide. Some of those disadvantages are-

• Difference is economy and economic conditions- Different countries have different economic condition and one currency means that there will be one one central bank who will have the sole authority to make rules regarding printing of bank notes and fixing of the interest rates. Since all the nations cannot perform good at the same time and hence one may perform better and the other may not hence forming of such policy that would suit each nation is not possible and such policy would be unfavourable to one nation and favourable to some other.

• Countries will loose their independence of making policies- The autonomy of a nation will be in jeopardy and hence each country’s trade might get affected. Countries like chine whose exports exceed their imports will lose money as they at times devalue their currency to make their exports cheaper and hence their economy is benefitted from such inexpensive exports.

• Poor countries will suffer and rich countries will prosper- If the world had one currency then it will lead to higher profits to already developed and rich countries. As in the case pf germany when it adopted the euro as it’s currency it’s exports increased because their former currency was doing so well and adopting euro a relatively devalued currency made their exports cheaper while the other poor countries suffered as their debt rose.

•Adoption of pne currency for the whole world would mean that trading in forex would stop and hence some people might loose jobs and this would create unemployment to a huge level world wide.