The Dollar's Decline: An Expert Speaks Out
"A single global currency would provide a standard measurement for economies, just as the metric system does for weight, distance and volume. Within today's large currency areas such as the United States and Europe, there are large gaps in income and wealth, yet one currency works quite well for them," said Morrison Bonpasse, president of the Single Global Currency Association.
Recently, I wrote an article for the E-Commerce Times entitled "The Dollar's Decline and Its Implications." Since then, I was fortunate enough to interview the president of the Single Global Currency Association, Morrison Bonpasse, to get his take on the current state of the dollar.
Opinions abound about the implications of a weak currency. Therefore, I wanted to speak with someone who has devoted so much of his life to the subject.
Ted di Stefano: Why do you and others support the creation of a single global currency?
Morrison Bonpasse: Briefly, it will save the world the equivalent of trillions of dollars and greatly reduce the risks to the international economy currently posed by the existing multi-currency system.
di Stefano: How would it save the world trillions of dollars?
Bonpasse: The most straightforward savings would come from the elimination of foreign exchange trading. Currently, the equivalent of US$4.2 trillion per working day is traded. This costs the world approximately $400 billion per year. Other savings would come from the elimination of the need to maintain low-return foreign exchange reserves.
di Stefano: How would it reduce risks to the international economy?
Bonpasse: A significant part of the risk in the international economy is currency risk, which is the risk that a currency will collapse, as happened in East Asia, Russia, South Korea and almost in Mexico. With a single global currency, there would be no ability to move money to another currency, because there would be no other, by definition.
di Stefano: How would such a single global currency work?
Bonpasse: Presently, we have regional monetary unions, such as the European Monetary Union, the Eastern Caribbean Monetary Union, and the West and Central African Monetary Unions. With a single global currency, there would be a global central bank within a global monetary union. If the euro can be the currency of 15 countries, why not a single global currency for the 192 UN members?
di Stefano: How would the world implement a single global currency?
Bonpasse: By expanding existing monetary unions by folding them into a single global currency. The single global currency can be said to exist when these currency consolidation trends create one currency for countries representing approximately 40 to 50 percent of the world's GDP (gross domestic product). After that, we will have passed a "tipping point" and the remaining countries will clamor to join.
di Stefano: What would be the role of the International Monetary Fund?
Bonpasse: The IMF was created in 1944 to help the world manage its multi-currency international financial system. It should immediately begin researching and planning for a single global currency. Such planning could include a future role for the IMF within the global monetary union, as there will be no need for the current work of the IMF.
di Stefano: Aren't currency fluctuations helpful to help the world adjust to other financial changes?
Bonpasse: The jury is still out on whether foreign exchange trading absorbs what economists call "shocks" or whether the currency fluctuations are actually themselves destabilizing events. Some economists have found that currency fluctuations are so unpredictable that they constitute a "random walk."
di Stefano: What would happen to currency traders with a single global currency?
Bonpasse: They are very smart people and they would either retire or find other challenging work. It may surprise you to know that the world's most famous currency trader, George Soros, has supported a single global currency since the 1980s, and said so in his 1987 book, The Alchemy of Finance.
di Stefano: Would a single global currency reduce world inequality of income and wealth?
Bonpasse: Not directly, but having one measurement standard for income and wealth would help make those inequalities more visible and thus more amenable to other actions to reduce them.
'A Standard Measurement'
di Stefano: How could one currency be used for such diverse regions as Europe and Africa, with their vast differences in economies and wealth?
Bonpasse: A single global currency would provide a standard measurement for economies, just as the metric system does for weight, distance and volume. Within today's large currency areas such as the United States and Europe, there are large gaps in income and wealth, yet one currency works quite well for them.
di Stefano: Would we need a world government to implement a single global currency?
Bonpasse: No. All we would need is a global central bank with the responsibility to maintain the stability of the single global currency. No world government was needed for the universal adoption of the metric system or for the development of the Internet.
di Stefano: What would be the name of such a single global currency?
Bonpasse: There have been several nominations, such as "eartha," "globo," "unit" and "mundo," but the Single Global Currency [Association] chooses no favorites. Instead, we will be sponsoring a worldwide nomination and selection process through the Internet to select five or fewer popular names. Then there would be a worldwide runoff. Such a choice would not be binding upon the future incorporators of the Global Central Bank.
di Stefano: How is your organization funded?
Bonpasse: We are an apolitical, nonprofit organization funded by tax-deductible contributions.
di Stefano: How are you spreading the word around the world about the need for a single global currency?
Bonpasse: We have a Web site, www.singleglobalcurrency.org, and we have published a book,The Single Global Currency - Common Cents for the World, and the subsequent 2007 edition of that book. The 2008 edition will be published in March 2008. The worldwide selection process for a name for the single global currency will increase awareness of the idea. When the people of the world learn how good a single global currency will be for them and the world, the movement toward that goal will accelerate.
di Stefano: Thanks so much for your time, Morrison. You've certainly given us a lot to think about.
Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at Ted@capitalsourcepartners.com.