Why isn't there one single world wide currency?

Question

I am hoping for the broadest range of opinions for this question and i am hoping "chrisvet" would be able to contribute an answere as his answer to my last question was chosen as the best by the community and this question is of a similar nature although i expect the answer is fairly simple.

Answer 1

Because there are different countries with different economic systems (capitalism, socialism, communism or any combination of these three), with different political systems (democracy, autocracy, authoritarianism, theocracy or any hybrid thereof) but most importantly, with different self-interests.

Unless of course, two or more countries agree to unify their respective economies and one very good example is what happened to most of Western Europe through the European Union by introducing its own unified currency called 'euro'.
If you look deeper among its members, you'll find the commonality that all have a democratic form of government with an economic system that is basically and fundamentally capitalistic.

Answer 2

It would create various problems when a country cannot control its own money supply -- which is necessarily the case if there were one universal currency. The money supply is a dynamic thing that must respond to the local economic conditions for there to be healthy economic growth and stability. I.e., to prevent inflation but encourage growth and full employment, a nation's money supply needs to grow at the proper rate -- not too fast (inflation) or too slow (depression). Sometimes conditions in a country began to make it uncompetitive -- its exports cost too much -- and so the currency needs to be devalued versus other nations' currencies to promote exports and economic growth. If not, you might have a recession. This kind of local adaptivity is impossible when there is a single global currency. In a global currency, individual nations no longer have control of the currency, no longer have a monetary authority (central bank) to influence these things, and no longer can control the money supply. And that's a problem because different nations have different needs at different times. Right now, for example, Europe is having a serious problem because Spain, Ireland, Portugal, Italy, and Greece need a very different monetary policy response than does Germany. But they are bound together by the common Euro, and Spain and the rest are suffering mightily as a result. Having one's own national currency is a great way to "build a wall" to protect against what other nations need in terms of monetary policy and to maintain the sovereignty to control your own money supply. I think of it as being analogous to wrapping telephone cable wires in insulation so that that the signals in one wire don't intermingle with and affect another wire.

Answer 3

There is no single world wide currency because the governments of all the nations do not want to have one.
If all the governments got together and decided on a single currency, we would have it. But most nations prefer to have more control over thier currency. It can change the trade deficiet and capital account balance as the currency increases or decreases in value relative to other countries. Changes to interest rates in one country could have adverse effects on the economy if the currency value could not adjust, so a world wide currency might require a world wide exchange rate, making adjustments to economic policies in a specific part of the world more difficult.

Answer 4

In 1944, the UN Monetary and Financial Conference in Bretton Woods, New Hampshire attempted to establish, if not a world wide currency, then fixed exchange rates among the world's currencies. It was a lack of these controls that many believe led to the Great Depression and a competitive devaluation of currency that led to the rise of Nazism.

However, in the '70's, Richard Nixon weened the US from the Bretton Woods agreement because the US was hemorrhaging money due to the Vietnam War which was undervalueing the US dollar.

So basically, the reason that there is no one international currency is that each nation has it's own both domestic and foreign concerns that should not always directly effect the value of goods in another nation that does not share those policies. For example, just because the US dollar has been devalued due, in large part, to our participation by choice in the war in Iraq, does not mean that countries that do not participate should be directly harmed by our economic policies.

Similarly, in 1997 when there was a fiscal crisis in much of Asia, the US was for the most part unscathed. It must be noted that China is currently practicing similar money devaluation policies to that of Nazi Germany in order to attract investors and bolster their financial lending abilities. And the US government has been one of the Chinese lenders most important customers of late. We have borrowed a significant amount of money from China to fund this war and the second they call in the loans or decide to elevate the cost of the yuan, we're potentially doomed.

One other factor is that up until about 80 years or so, the vast majority of the third world did not even use currency much as we know it. Much of the exchange was done with crops, livestock, etc. It is only in the age of globalization that the idea of single currency has ever been discussed. Still, many countries are averse to full participation in the economy of "globalism", ie. American form of capitalism. Some believe the jury is out on it's effectiveness. Japan and China have utilized their own form of capitalism and they have seen enormous growth, at times, due to their unique economic choices.

Answer 5

the value of money is determined by the wealth of the country that backs that currency. Some countries have so little wealth to back their money...or are such a terrible credit risk that no one wants their money, therefore it is worth nothing on the open market. If we had one world-wide economy and government this would work, it will not as long as we are a free and independent nation.
The Euro is good for some European countries, and has ruined the economy of others. I don't see how a strong economic country can back up a poor country.
I believe this is why the UK is still on the Pound and not the Euro; they don't want to back-up and support a good part of Europe. (Austria is one country who has been hurt by the Euro).
It is sort of like everyone on your block pooling all their assets, and then letting everyone borrow from the total of those assets. Some will borrow and repay, some won't. Would you trust your neighbor three doors up with your diamond rings, property and car? I wouldn't.

Answer 6

A couple of reasons i can think of.

- National pride
- Religious reasons (some nations have something similar to " in god we trust" - while others are anti religion)
- Cultural differences / mistrust between countries.

Some practical issues:
- Determination of value would prove a hard task
- complete transparancy in pricing and taxing by local governments will make certain governments look very greedy and possibly cause bankrupcies in several countries.

In Europe, the introduction of the Euro is a nice experiment, but has already given rise to problems.
In many countries, prices have risen, sometimes extremely.
Some countries have undervalued the euro compared to their national currency (Germany and Netherlands for example)
Some countries have overvalued the euro (such as italy and spain)

There is a lot to be ironed out before it will even become believeable as an option.

Answer 7

Greetings. if there was one world wide currency it would be like taking a step backward in time to when our money actually had value. Now it says on the bills, not pay to the bearer on demand in Gold or the later Silver dollars. now it is in God we Trust. Money now is not backed by anything of value. So how could you have a universal money not backed by anything of value that everyone would accept as currency? Why accept money from a nation that has nothing of value to back it in payment for your product? what would you do with it? Who could you pass it off to? And more importantly how could the politicians of all the nations be able to manipulate it for profit as they do now. never happen unless we get some One World thing going where there are no longer any separate nations.

Answer 8

Sovereign nations issue their own currency as legal tender for "all debts, public and private," as is printed on U.S. dollars. The utility of currency as legal tender to pay taxes is key to its value. As sovereign nations are separate taxing units, their tradition of accepting their own currency for payment of their taxes perpetuates the issuance of national currencies. In some countries, such as the United States, the issuance of a national currency is constitutionally prescribed.

Despite all of the foregoing, the U.S. dollar tends to serve as a de facto single world wide currency. When traveling abroad, I rarely go through the bother of exchanging U.S. dollars for local currency, as I find most foreigners receptive to payment in U.S. dollars.

Answer 9

As long as you have different languages, cultures, political boundaries etc., currency cannot be common. Currency is a part of the national image. Euro is a bold experiment.

Answer 10

The bible talks about a world wide currency in Revelations. The movie Left Behind also talks about it. Just knowing that it's predicted in the Bible makes me shudder.