Recently, a group of Swiss fund managers made comments about the global monetary system, calling it “fragmented” and in dire need of a revision.
The solution to the problem they propose is the introduction of a global bank and one world-wide currency.
From a general perspective, a single global bank and a world currency make more sense than our outdated collection of national monetary policies and currencies.
Imagine: getting rid of all the national currencies around the world to make one unified form of coin. In one fell swoop, the risk of currency wars and the harm they can inflict on the world economy would be eliminated.
Pricing would become more transparent, making it easier for consumers to spot the best deals. And by eliminating foreign-exchange transactions and hedging costs, a single currency would rejuvenate stalled world trade and improve the efficiency of global capital.
But could it actually work?
Forming a universal currency might be admirable in theory, but actually executing it would require a tremendous, collaborative process. There are many differences between countries that would have to be harmonised. Differences in variables such as national character, work ethic, market strength, and national debt would make this shift very rough and unlikely. What is the universal cost of a long black coffee? In Spain, it might be $2 (NZD), but in Germany it might be $4 (NZD). Where and how do you find the balance in deciding a universal cost?
However, technology is now reaching the point where a common digital currency, enabled by an almost-universal mobile phone adoption, certainly makes an evolution to a global currency conceivable.
Speaking of technology: Facebook recently unveiled Aquila in London. No, Aquila is not a new variation of tequila; it is a massive, flying wing drone that will fly, pilotless, above regions currently cut off from the web, beaming down the internet via lasers.
Yes, lasers… Aquila, is aptly named as it means “eagle” in Latin.
So, while Facebook is making big strides in unifying the world with internet beaming lasers, the idea of globalising currencies into one banknote still remains somewhat far-fetched.
What are your thoughts on monetary globalisation? Is it a good idea? A bad idea? A realistic idea? Any feedback, inquiries or comments are welcome. Please email Simon at sdalton@gerryrea.co.nz.