Global currency - How would it work?

Apart frm a little bookeeping I have very little understanding of currency markets and labor values etc... In fact I know just about nothing of how globalisation off curremcy would work.

In some sci fi novels, they refer to a future currency as "credits" where by all transactions are digital and no coin or "paper" money exists.

If the world was to move towards a global currency:

How would it do it?
What would have to be considered?
How do you rationalise the labor market so that it was equitable?
Would a kg of rice cost the same everywhere?


I find this concept facinating, care to discuss?

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How would it do it?

It would have to evolve. The US dollar is the closest right now, although the EU's euro is in competition. Whether the euro will replace the US dollar remains to be seen. Gold or silver coinage is cumbersome but has real value. Convertible scrip should be acceptable, but fiat scrip requires faith in the issuer.​

What would have to be considered?

Political and financial stability in most of the World's nations. Also an agreement to recognize the authority of a single international reserve bank as well as the willingness to abide by uniform international banking regulations.​

How do you rationalise the labor market so that it was equitable?
...and...
Would a kg of rice cost the same everywhere?

No. That's a matter of market driven commercial activity and not banking.​

 

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One problem with a "world currency" that is used by everyone is that it would take away a government's ability to regulate the economy by adjusting the money supply.

 

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If almost the whole world including the most rural villages was highly wired and there was a one world government then sci fi novels vision could become true. If barter was banned and if the government's computers tracked every penny then for profit crime would end. Unfortunately revolution would also become almost impossible so that one world government had better be a clean, open books, transparent, corruption free democracy.

If the currency in circulation was kept at a fixed ratio to world population and banking reserve requirements were kept stable then for the first time in the world's history we would economic statistics that can't be interpreted in wildly differing ways and also inflation as we know it would be over.

As things are now, swings in currency exchange rates can lead to unnecessarily duplicated and therefore idled and wasted production facilities. Have a look at The percent change of the Thai, Mexican and Brazilian currencies against the dollar since 1993. http://www.oanda.com/products/fxgraph/fxgraph.shtml Which country would you put a steel mill making steel for the US market in? As those currencies swung based on financial hysteria rather than for solid economic reasons the comparative advantages and disadvantages of producing exports in these nations changed.

Exchange rates move based on supply and demand of currencies but nations can manipulate the supply and demand of currencies. Pegged currencies are manipulated currencies.
The basic rule for exchange rates is if (exports - imports) + (foreign investment entering the nation - foreign investments being sold leaving the nation) + (the proceeds of domestic investors investment in foreign nations being sold and re-entering the nation - domestic investors new investments in foreign nations) +(increases in the amount of the national currency being held in foreign nations for reserves or speculative purposes or use as currency for international trade or in the case of the dollar for use as a local currency in some places - decreases in the national currency held for reserve or speculative purposes or international trading purposes) is a positive number then the currency will rise in value and if it is a negative number then the currency will fall in value.

The other rule for exchange rates is that when a nation prints money faster than it's economy is growing inflation takes place and the nations currency falls in value.

 

it would not work unless money was printedi by one centarl government, the reason currencies vary is because there is so much money being produced compared to much much resources being produced, there must be enough money to match the resources, if any more or less is made then the currency fluctuates

 

Terrific response guys.....
Question:

What is the difference between a 'credits' system and a currency system?

eg:
A person does 8 hours work and gets paid in credits compared to getting paid in cash?

I guess it would determine what that person spent his money on, as determined by the end receiver of the credits. Where as cash can be spent any where....any thoughts?

 

If the world is developed enough to have one electronical currency, then it is developed enough to have readers of that information everywhere (not unlike credit card readers). There would be no difference, but I guess the underclasses and criminals in different parts of the world will have their own local exchange material. To escape governmental control, etc. Maybe gold coins?
just my speculation

 

as far as i know, most of the countries accept U.S. Dollars,so we already have a global currency...

 

Maybe we can use the Euro as a model?!?

 

Why? What's there to model about the euro?

 

The Euro represents a common currency for several different countries. It seems to me it could be seen as a model of how a currency could work for more than one country.

 

True...but I really doubt that any government could outlaw barter.

 

The US dollar already works across international borders. As for the euro model, the European currency is still a work in progress and their central bank an experiment. It is still to prove itself as is the EU "constitution".

It'll be interesting to see how things develop.

 

It depends on what credit system means to you. Where did you hear the term "credit system"?

Currency could be called a credit system. The "credit systems" that I have heard of are really private currencies that facilitate multi-party barter. In the USA, the US government could prosecute these systems because only the US government is allowed to create currency and because if the US government considers barter to be tax evasion. According to the IRS if a plumber and a dentist exchange services they must both pay income tax on the fair market value of the services received.

 

reminds me of a story my grandma told me:

one day she had gone over the border to talk to one of her friends in america, on the way she stopped at a store in america, and bought something to the value of about $5, then continued on her way, but as she reached the other side of the car park, the shop attendant came chasing out cursing at her, because she had mistakenly given her a canadian 10c coin. we are talking less than 10km from the border, someone being chased down for using a 10c coin from the other country. americans are so protective of their precious money, while in NZ and aussie, 5, 10 and 20c coins are contsantly misused to no with no complaints.

i just feel like taking $100 of 10c coins to america and stuffing them in their vending machines to get back at them for their arrogance.

and USD are anly accepted as currency in poor nations where the US have military bases to spend money. euros are more likely to become a global currency.

 

The term "credit" as used in SciFi stories generally meant the specie in circulation. I started reading SciFi in the forties, and the term was in use then. Since "dollar", "mark", "pound", "franc", etc., were real monetary units in a real world, I suppose it was an appropriate choice because nobody used the term "credit" as a monetary unit.

 

Global currency = Global Government = Over my dead body!
Although that being said we do already have a global currency that's used by the WTO etc but I've forgotten what they called it...

 

I'd like a global government. One planet, one nation, one government.
Although I'd prefer that some 3billion earthlings would be deported to Venus.

 

id settle for a specific 350million

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global currency can exist without global government, you just have to hve an indepentand group supervise the crirculation of the money so that it has the same value world wide

 

Wouldn't that govern the world?

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In some way..