Recently, I asked the president of the Single Global Currency Association, Morrison Bonpasse, about his take on the current worldwide economic problems.
Here’s what Mr. Bonpasse had to say:
Theodore F. di Stefano: To what extent do you attribute today’s economic problems to the lack of a single global currency?
The global economy depends upon trust, confidence and the expectation that risks are measurable and manageable. In today’s multi-currency world, there is significant currency risk, especially for those currencies managed by single nations where national economic goals obscure the need for monetary stability. As the global financial turmoil spread in 2008, Iceland’s currency collapsed and required IMF (International Monetary Fund) assistance. Other countries, including Hungary and Poland, also required IMF assistance. For those countries, the common assessment was that belonging to the Eurozone would have avoided the currency risk and the resulting substantial hardship within each nation.
Similarly, if the world had already implemented a single global currency by 2008, there would have been zero currency risk, worldwide. There still could have been housing and stock market bubbles, but there would have been no currency risk, and therefore the current global financial turmoil would have been reduced.
TdS: How do you think having a single global currency would have assisted the resolution of the current world financial turmoil?
MB: As the world struggles to rebuild confidence and trust in markets, the values of currencies fluctuate widely and cause uncertainty and increase currency risk. For example, the value of the UK Pound decreased by 23 percent in relation to the euro over the past year, which is a dramatic shift between two of the world’s major reserve currencies. Investors and business people and even travelers need assurance that today’s money will be worth the same tomorrow, and a 23 percent change in one year frustrates that need. The movement of vast amounts of money around the world to avoid currency risk is not productive.
With a Single Global Currency there would have been no such fluctuations of values of currencies, as there would be only one currency, by definition.
TdS: What are the advantages of a single global currency?
In addition to eliminating currency risk and currency fluctuations, a single global currency would eliminate the need for foreign exchange reserves, which now total more than (US)$4 trillion in underutilized assets. It would eliminate approximately $400 billion spent annually in foreign exchange transactions. A single global currency would increase the global value of assets by tens of trillions due to the elimination of currency risk, and global inflation would be reduced by the management of inflation by a Global Central Bank, whose primary objective is monetary stability. Even in today’s economy, that’s “real money,” as the late U.S. Senator Everett Dirksen would say.
TdS: What are the disadvantages of a single global currency?