Analyzing the Feasibility and Impact of a Universal Currency

This essay delves into the ongoing debate surrounding the implementation of a universal currency in the global economy. It begins by highlighting the arguments in favor of a universal currency, such as the potential for economic stabilization, the elimination of currency conversion charges, and the reduction of opportunities for export rate manipulation. The essay then presents the counterarguments, including the challenges of reaching international consensus on monetary policy, the potential for centralized control and corruption, and the vulnerability to economic shocks. It also considers the example of the Euro and the impact of cryptocurrencies like Bitcoin. Ultimately, the essay concludes that while a universal currency might seem appealing, its practical implementation poses significant challenges, making it neither feasible nor desirable in the current global landscape. The essay draws on various sources, including economic research and scholarly articles, to support its arguments and provide a comprehensive overview of the topic.

Running head: UNIVERSAL CURRENCY
Universal Currency
Student’s Name
University
Author’s note

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As the world is undergoing a radical shift owing to globalization and free market
economy, the issue of a universal form of currency has taken over the central position of
economic and societal debates. It is often argued that without a universal currency, there is no
possibility of a complete economic integration, which has become the imminent need of the
contemporary world (Kuznetsov 2018). Free trade and special economic zones, aided with
booming information technology and connectivity, are rapidly adopting mobilization of labor,
goods and services across the world (Desai 2013). Hence, the adaptation of a universal currency
is only a matter of time. Although a large section of experts on the fields of economics and
sociology hold such a perspective, there are also several scholars who are strongly opposed to the
idea of a universal form of currency. They maintain not only the proliferation of global currency
is quiet impossible in near future, but also that it would be harmful for the world. To this end, the
present essay seeks to find the positive and negative impacts of universal currency. However,
taking note of the contemporary global situation, the essay hypothesizes that implementing a
universal currency may seem obvious, although it would be highly impractical for the global
economy.
Currency in general denotes a monetary unit that is used as a medium of economic
exchange. Commonly known as money, it is usually circulated in the forms of coins and bank
notes. However, a currency is strictly specific for a particular country. To elucidate, a particular
form of currency is the symbol of the economic system of the respective country (Menkhoff et
al. 2016). The US dollars, euros, yen, dinar, pounds are all examples of currency. The value of
the currencies depend on two factors, i.e. the economy at large and the physical metal reserve of
the governments (Menkhoff et al. 2016). However, in recent times, digital currency has arisen

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owing to the advancement of internet. Still, the standard economy is based on the traditional
currency system by and large.
Given the nature of standard form of currency, it is observed to be restricted in national
economic system. However, with the rise of international trading and foreign exchange market,
there has been observed an increased tendency to opt a global or universal currency that would
be transacted internationally, without any national border, as well as withstanding the constant
conversion factor. Just as depicted in Heinlein’s sci-fi Friday, The fictional world of Balkanized
America favored Las Vegas currency for it was backed by gold standard (Heinlein 1982), the
world trading system has been using various national currencies as universal reference currency
over time . Prior to 20th century, the universal reference to currency was determined by the gold
standards, making it the contemporary global currency. Later on, the British pound sterling
gradually took its place. In today’s world, given the strength of American economy, the US
dollar has recognized as the de facto global currency. However, there are several economies who
deny the supremacy of the US, unsettling the recognition of a universal currency (Dow 2017).
According to World Bank’s data, a magnanimous amount of $75 trillion is in circulation
worldwide. However, among them only $5 trillion is in physical form, leaving the rest stand only
as virtual money stored in savings accounts, bonds, long-term deposits and stocks (Welch and
Welch 2016). Indicating this phenomenon, the advocates of universal currency argue that it is
inane to maintain various forms of currency, while the largest amount of asset is already
digitized. Moreover, economist John Meynard Keynes argued in favour of universal currency
long before digital money existed (Mundell 2012).

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The advocates of a universal form of currency argue that standardization of currency will
eventually stabilize the global economy, undeterred by confusing exchange and conversion rates.
Besides, this will help eliminating the conversion charges, contributing to the business growth. If
a standard currency is used all over the world, it would eradicate the chances of manipulating
export rates and pricing. This will also contribute to curb hyperinflation in developing countries
by stabilizing the prices of necessary goods and services. The supporters further present the
example of introducing the euro as the standard currency among the EU nations, stating the
practice has only flourished their trade (Ali 2017).
Although it presents a strong case for implementing a universal currency, it is to note that
Keynes’ ideas went out of favor owing to several drawbacks of the proposal. The critics point
out the most significant flaw in implementation of universal currency by the evidence of the
Great Depression. They argue that with a universal currency, value of money will not be
controlled on a national level, each and every nation will have to come to agreement on how
much money should be available around the world and how many bills will be printed. Reaching
a consensus regarding the matter is obviously a herculean task (Pop and Valeriu 2015).
Moreover, the evidence of EU itself falls short on its merit owing to the fall of Greek economy,
as it was crippled under the pressure of other wealthy countries and could not control its own
currency (Ferreira, Dionísio and Zebende. 2016). Also, the uniform currency value will not
eliminate the confusion and conflict, as international business will still need translators.
Apart from pointing to the drawbacks of Keynes’ ideas, the critics also present several
other arguments against universal currency. A universal currency will make the world economy
more centralized, opening chances to more corruption and misuse of power. The emergence of

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cryptocurrencies such as Bitcoins will only add to the problem as it is rendering institutionalized
control and protection over currency redundant, leaving room for anonymous transactions, fraud
and misuse of wealth (Yermack 2015). Besides, a sudden shock to the centralized economy will
send crippling waves to the involved nations, culminating in a potential economic paralysis. This
is even fortified by the example of Greek crisis, as the collapse has also affected even the
economic giants such as Germany and France.
A central body of printing and controlling all the currencies will not even be able to
address the specific crises faced by different countries. Moreover, countries with a better
economic position will only benefit from the universal system, for they will have an
advantageous position in the central banking and fiscal policy making decisions, still holding
chance of economic imbalance and discrimination (Mussa 2017).
Considering both the sides of the arguments, it is likely to consider the implementation of
a universal currency more problematic rather than giving access to a simpler and prosperous
economy. Therefore, it is neither a feasible nor an acceptable stand.

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References
Ali, Salman Syed. "Issues Involved in the Proposal of ‘A Global Currency to Stabilize the
Monetary System’." Journal of King Abdulaziz University: Islamic Economics 30.2 (2017).
Desai, Radhika. Geopolitical economy: After US hegemony, globalization and empire (the future
of world capitalism). London: Pluto Press, 2013.
Dow, Sheila C. "Global Currency Reform: A Proposal." Journal of King Abdulaziz University:
Islamic Economics 30.2 (2017).
Ferreira, Paulo, Andreia Dionísio, and G. F. Zebende. "Why does the Euro fail? The DCCA
approach." Physica A: Statistical Mechanics and its Applications 443 (2016): 543-554.
Heinlein, Robert Anson. Friday. Holt Rinehart & Winston, 1982.
Kuznetsov, A. V. "Supranational currency regulation: theoretical and practical approaches."
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Menkhoff, Lukas, et al. "Currency value." The Review of Financial Studies 30.2 (2016): 416-
441.
Mundell, Robert. "The case for a world currency." Journal of Policy Modeling 34.4 (2012): 568-
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Mussa, Michael. "Political and institutional commitment to a common currency." The American
Economic Review 87.2 (2017): 217-220.
Pop, Napoleon, and Ioan-Franc Valeriu. "Crisis, globalisation, global currency." Procedia
Economics and Finance 22 (2015): 479-484.
Welch, Patrick J., and Gerry F. Welch. Economics, Binder Ready Version: Theory and Practice.
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Yermack, David. "Is Bitcoin a real currency? An economic appraisal." Handbook of digital
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