Submitted by Morrison Bonpasse, Sep 28, 2007 20:45

Currency fluctuations such as we see between the U.S., Japan, and Europe and among all countries or monetary unions around the world are wasteful, risky, and unnecessary.

What is needed is a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union. (See www.singleglobalcurrency.org)

The benefits of a Single Global Currency are staggering, and the world should begin now to plan for such a Global Monetary Union. Regional monetary unions, such as in Europe, the Caribbean and West Africa, are also beneficial, but their biggest problem is that they necessarily exist in a multi-currency world and their currencies fluctuate unpredictably.

The world needs a Single Global Currency and the sooner, the better. We have the dollar and the euro and credit cards, but citizens of the world still use about 146 currencies and pay about $400 billion annually to buy and sell other currencies when they are needed for conducting international transactions. There are surely better uses in the world for that $400 billion.

1. The existence of the 13-nation, soon to be 15-nation, eurozone shows that monetary union can be successful. The eurozone is expanding because the people of the Europe want stable money. They don't want money the value of which fluctuates unpredictably. The best long term solution for stable money is the Single Global Currency.

2. The Single Global Currency will eliminate currency risk and the risk of currency crises and almost all concern about balance of payments or the current account.

3. The goal of the Single Global Currency Assn. (www.singleglobalcurrency.org) is a Single Global Currency by 2024, to be managed by a Global Central Bank which would operate in a manner similar to the European Central Bank or the Eastern Caribbean Monetary Union Central Bank. The governance of the Global Central Bank should be representative of ALL the people of the world, and their respective governments and financial institutions.

4. In the meantime, other regions are exploring the creation and expansion of monetary unions in Latin America, West, South and East Africa, the Arabian Gulf and South and East Asia. A key value of a monetary union is that the value of its money does not depend upon any particular national government, but upon the management of a central bank, the primary goal of which is stable money.

5. Implementing a Single Global Currency within a Global Monetary Union will take time. What is needed now is more research and writing about the prospects. Is the claim of $400 billion in potential savings from the avoidance of foreign exchange transaction costs a reasonable estimate? If not, what IS the total value of the cost of exchanging $2.5 trillion every working day? (Travelers pay between 1-2% to exchange money, so try applying that percentage to the $2.5 trillion daily exchange. Most currency exchange transactions are at a much lower rate, but these numbers give a sense of the sheer scale involved.)

6. It is true that within a monetary union, individual countries no longer control their monetary policy, but in return they get more stable money and lower inflation and lower interest rates. The power to control monetary policy often meant the power to inflate a currency to please the exporters, but those policies came at a cost to importers and to those whose assets were denominated in the inflating currency. The costs and benefits of inflating a currency work out to about a zero sum game.

7. From underdeveloped countries, much of the wealth is sent to safe financial centers to avoid the risks of currency failure. With a Single Global Currency, that incentive to send money out of a country would no longer exist. To be sure, other risks remain, but not currency risk.

8. The value of assets in countries with risky currencies is depressed due to that risk. When those countries move, perhaps in an intermediate step, to a regional monetary union currency, and then to a Single Global Currency, the value of those assets will increase dramatically, approximately by $36 trillion, due to the elimination of currency risk.

9. To some, the implementation of a Single Global Currency seems unrealistic, but consider how realistic the euro looked in 1995 when it only had a name and the deutschmark was supreme, and the French had their francs and the drachma was one of the oldest continuously used currencies in the world. The Single Global Currency is not a panacea, and it will not eliminate global inequalities of wealth and income, but it will provide vast benefits to the world.

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