Posted by Allison on 6 April 2009, 15:12
Could it really happen? Could a single global currency really ever come into being? The concept is certainly a bold one, but there are many things to consider before the idea could ever become a reality.
The recent and boldest example of a single currency dominating a significant part of the world is the case of the Euro, which has done away with fifteen currencies in Europe (not to mention several other countries which have also decided to start using it.) This is probably the closest we could get to what would happen if a single global currency was ever adopted.
So what are the barriers that would stand if serious consideration would ever be given to the idea? It has been suggested by some that it could happen in the future, but it's hard to come around to the idea of every single person in the world using the same coins and banknotes.
It's certainly not something that could ever happen overnight. It would take many years of planning to actually come into force, since guidelines and joining requirements would have to be drawn up first. It is virtually impossible to imagine every single country being able to join a global currency at the same time, since the economics of each country are very different – wildly different in some cases. This is certainly a situation where introducing a single global currency sounds easy when you say it – but in actual fact it's an extremely difficult event to pull off in reality.
When you look at the Euro and what happened prior to its launch you can see how the idea (if it ever actually came into being) would take a long time to come to fruition. Every country that wanted to join the Euro had to be able to meet a number of requirements before it could ditch its own currency and use the Euro instead. Before the Euro came about, each country had different exchange rates with all the other countries in Europe. The introduction of a single currency meant that your money was now worth the same as the money in the country next door to you, in effect.
Can you imagine this happening on a global scale? Perhaps the most obvious problem would be with developing and developed countries, where the economics and day to day life of the inhabitants are so different that a single currency which is used by both parties would be hard to imagine.
There is also the very real issue of tensions and conflicts which are occurring around the world at any one time. This is perhaps the biggest barrier to a single world currency ever being taken on one hundred per cent. Any country which is at war with another one – or is at least in disagreement with them in some way – is very unlikely to agree to getting involved with a single currency, however politely the offer was made.
In this sense you could imagine a world of the future where a great degree of the world's countries had joined a single global currency – perhaps seventy to eighty per cent of the world, for example – and the remaining percentage would be standing firm against it. Could this in itself result in disagreements and wars ensuing? It wouldn't be too hard to imagine.
The fact remains that every country has its differences when compared to any other country in the world. We all have different beliefs, economies, religions, desires, goals and histories, and each and every one of these factors could stand in the way of a single global currency from ever becoming a reality.
There is also the very real situation that some people simply do not want to see the back of their own currency. The Britons are a good example of this – in general they do not want to join the Euro and have to say goodbye to their beloved pound forever. It is perhaps stretching things a little to say that every country in the whole world will eventually want to wave goodbye to decades (and sometimes even centuries) of a currency that has worked well for them, in favour of an untried and untested currency for the world.
This of course begs the question of what would happen if the world did eventually operate on a single currency and things went wrong. How would you deal with the fallout? Many people are highly sceptical of a global currency, citing the very real fact that there are too many things that could go wrong with it. While the idea of a world in total harmony and at peace is wonderful, the chances are quite low that it would ever happen. And yet that is exactly what you would need for a world currency to ever really stand a chance of working.
Some people think that if it ever did happen, the world would descend into warring with itself – even more than occurs today. But it is not just the big issues that underline whether or not we should give serious consideration to this idea. The smaller everyday issues that people have with money must also be considered if this is ever to become a real possibility.
In the end, it is probably a more realistic idea to envision a world some decades into the future which has four or five main currencies instead of one single one. The Euro has largely shown that a number of countries can successfully adopt a single currency among them, so it could reasonably be assumed that we might at some stage see a separate currency for, let's say, each separate continent. Even if it didn't split in quite this way, we could suppose that four or five currencies would have a better chance of working than simply concentrating on one global currency.
It will be interesting to see how things play out in this arena, but one thing could be reasonably expected to be certain. Most of the people currently walking the planet are probably unlikely to have to get to grips with a global currency in their lifetimes.