Effect of one world currency?

I don't currently have any plans to make a world featuring one, but what would be the effect if modern earth changed to using one universal currency?

There couldn't be any exchange rates obviously, and there would have to be a period where both universal and locational currencies are in use, but aside from that I have no idea what else would happen. We'll assume for posterity that all countries involved agreed to it

Not all that much in day to day life. There would be an issue if the value of this currency drops. Normally, other currencies would gain promanance to compensate. If the dollar becomes worthless, people will start usign euros instead.

International travel would become marginally cheaper and easier since you don't have to change your money into a different currency and thus dodge the subsequent conversion fees. Conversely those currency exchange places all go out of business.

Coin collectors around the world go berserk hoarding examples of older currency.

It depends on the nature of the currency. The real question is "Who is issuing it?" because if it's a global bank then they will basically control the world economy.

I assume a global currencly & bank would require a world government. Or at least the UN significantly empowered.

Or a God Emperor.

That could work too.

International trade today is conducted in US dollars, at least on paper. We aren't that far away from a one world currency when there's already a world's reserve currency.

As mentioned however, who would back this currency? As we've seen in the failure of bitcoin, it would require a superpower government of some sort.

I don't think it would require a world government, but I do think you would need some sort of unitary authority empowered by multi-lateral treaty.

The Euro is already in use over a large part of Europe while maintaining sovereignty of the nations within the EEU.

An Economic Treaty such as the EEU would suffice for a world currency while maintaining the ability of member nations to set their own domestic/foreign policy on other matters and elect their own governments.

Hmm...

I guess you could provide examples of what happens if it was

A) One world order or B) U.N/similar coalition.

Also, how would it differ if they rose to power through violence rather than agreement in each case? Aside from people being pissed about the currency and either hording the old one hording it or refusing the new one.

edited 10th Sep '14 4:04:23 AM by doorhandle

How did it fail? I haven't following the news around Bitcoin.

^ Unaccountability. People were basically pilfering, hoarding, and secretly transferring those with little to no record of that type of money management. Many of those practices are highly illegal in most countries with public trade.

Once those sorts of things emerged, one of the primary issuers/creditors/distributors (Mt. Gox) folded and people pulled out of the idea in a hurry leading to a crash. It hasn't been as popular since.

Last I checked, Bitcoin is going for about 500 a pop.

^ It used to be higher before the Mt. Gox cock-up.

true but it's by no means out of the game.

I'd say it is.

Any credibility it had is completely gone and only idiots and criminals continue to use it. Any chance of it becoming a legitimate currency is out the window

^ Especially at the political level which is a major buttress of support for currencies. No political support = worthless currency.

Half the reason Bitcoin got above $500 in the first place though was market manipulation by Mt Gox. Anyway, people still use it, but they're more aware of the risks now too.

As for the original question the question is who manages the currency. If you have currency union without political union like the Euro, you'll get the Euro disaster writ large. It could work if you have one world government though.

Essentially bitcoin went from being a currency to being a form of gambling. Gambling's still very popular and it is theoretically possible to make it big while doing it, it's just not a good idea to stake your financial future on it.

My economic-fu isn't that good, but...

You wouldn't have any exchange rates, sure, but purchasing power would still vary dramatically from location to location (as there is still going to be a surcharge to ship items around), and the lack of an alternate form of currency would make things difficult when... worldwide financial instability rears its ugly but fascinating head. (Under some situations, anyway.)

You'd need massive inter-connectivity (which we don't quite have yet, since the tech to do so is doled out too inconsistently and with priority to richer nations) and a strong external reason to require a single world currency rather than a central currency other currencies may or may not map themselves to. ...Which not everyone likes either. Would you give economic reins to present-day Russia? Because that's how it looks to everyone who isn't from the US and remembers 2007-2008.

I suppose you could argue that the gold market fits some aspects of this - but it wouldn't work as a common currency (as much as the hard metal enthusiasts would like it to) for how heavy it becomes as you accumulate it. Your life's savings in gold would be a boulder in your front yard, and promissory notes from the bank wouldn't be all that different from what we have now, except even more vulnerable to inflation. It might work for local trade, but bank notes fit in a briefcase better. And any situation where paper money becomes worthless ...is where Worthless Yellow Rocks comes into play. (Basic necessities, like clean water or food rations, would take its place in a survivalist situation I think.)

I can't speak to the effects of a single world currency, but there are some situations where it would be plausible. The common ones would be a sci-fi setting in which the need to have a single currency is for off-world trading, or a fantasy in which the population is low enough and the world (effectively) small enough that a single currency greases the gears rather than starts wars. Or one where the definition of currency broadens back to 'a medium of exchange', and bartering is brought back as the primary means of trade (as even current-day tech is enough to facilitate a fair-ish market).

I've been reading Tim Geithner's book, and it makes the point that it's very difficult to tell just what exactly is going on in a financial system at any time - and that's just for individual countries! Map it out onto a worldwide system, and it'd be impossible to adequately manage, let alone actually control, risks.