During the whole of the preceding year, the focal point of the global financial system has been on the currencies of the different regions of the world. While the year witnessed the downfall or bankruptcy currencies in a number of nations in East Asia as well as in Russia spreading triggering off an apprehension that this would result in a global monetary slump, the member nations of the European Union plan to bring in the Euro in 1999 with a view to make it the common currency of all EU member countries by 2002. In other words, the Euro intends to replace all the national currencies of the European Union within three years of its introduction.
Most people are of the conviction that the crisis caused by the different currencies in the global financial markets can be solved easily. They are of the opinion that the Euro and the Dollar ought to become one currency giving rise to a new currency - a Eurodollar, during the ensuing decade. In effect, the idea is that the new currency, the Eurodollar, could be the common or shared currency for Europe as well as the United States and gradually for the entire world.
In fact, it is our belief that history, economics as well as politics indicate that having a common or share global currency will be of immense benefit. In order to substantiate our perception, it is essential to offer a concise fiscal history pertaining to currencies demonstrating that at any time when it has been viable from the economic as well as political point of view, the nations of the world have shifted towards a common or shared currency. Subsequently, when we consider the political and financial influence of a common or share currency, we discover the manner in which a common currency is effective in the money market, especially the stock market. In the later part of our discussion on this issue we shall make an endeavour to demonstrate the manner in which Europe and the United States may introduce a common currency for both the regions and ultimately circulated in all the nations across the globe.
The possibility of introducing a common currency for Europe, the United States as well as the remaining regions of the world became apparent way back in 1973 when the world witnessed a variable or adjustable exchange rate system for the first time ever. In fact, it is possible for the Eurodollar to surpass what had been established by Bretton Woods and the Gold Standard by far, by setting up a single currency instead of a system that involved fixed or inflexible exchange rates that prevailed earlier.
Economists are of the opinion that the time and situation is just suitable for such a transformation. In fact, the launch of the Euro has generated the impetus essential for shifting from the present system to a single or common currency. Already the technology for effecting this transformation has been established in Europe and owing to the irregular uniformity between the US Dollar and the Euro; the transformation of these two currencies into single or common money for the United States and Europe is possible at a nominal expenditure.
While all conditions are conducive for the introduction of a single currency for Europe and the United States, the only obstacle in the path of establishing a currency union is the absence of a political desire to effect such a change in the monetary system. It may be mentioned here that before the introduction of the Euro in Europe, political leaders had to make several endeavours to convince the people of the different nations and build their confidence regarding the benefits of having a single currency for the region. Thus, any move to introduce a single currency for Europe and the United States will require even more endeavours and a stronger political on the part of the politicians on both sides. However, it is also true that some time in the future, people would ultimately realize the advantages of having a common currency and find that the benefits far surpass the costs of having a single currency. At that point of time, they will start inquiring if it is possible to have a system without a single or common currency. It may be assumed that at that juncture, having a single currency will eventually turn out to be an economic as well as political inevitability. And in such a situation, the world that functions with as many as 200 odd currencies will be considered to be a unproductive leftover.