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Jim recalls a number of times when a single currency has been proposed in an effort to promote international trade.
Jim figures that a single currency within banking and finance makes perfect sense. It also has the advantage of separating the real economy from the financial sector.
Retail banks
will necessarily hold or obtain local currency to satisfy the needs of the real economy. Trading banks are not similarly restrained.
A massive loss in the financial sector will translate into a massive drop in the value of the single currency.
...
ANDY SLATER?
http://www.google.c...UTF-8&q=ANDY+SLATER
Who he? [zen_tom, Dec 10 2010]
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Annotation:
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How will you prevent the 'financial sector' from trading in local currencies? After all, their goal is to amass real wealth. |
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There is no restriction in currency trading. If you mean what is to prevent banks from not using the single currency... well it is just the law. |
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Local currency, for example, is not legal tender for single currency transactions. Share trading would fall under the single currency and participants would need to obtain single currency to proceed. |
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And yes it would appear that amassing large amounts of local currency is a good strategy for anyone/anything. Large amounts of the single currency will be subject to single currency fluctuations. |
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(Note that to obtain local currency the bank will need to exchange single currency for local currency.) |
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And in particular trading bank loans will always be subject to single currency fluctuations. |
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I think most governments and "big buisness" would be against a single currency, because it would lower the ability for outside investors to invest direclty in countries via currency exchange and make individual countries more prone to recession due to currency devaluation in other countries. |
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the USA and China have made fortunes by currency exchange schemes (USA for having everyone buy treasury bonds) (China for devaluing it's currency to promote foreign investment) |
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I like it, but anything that promotes efficiency and cuts out middlemen probably won't ever get adopted. |
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Separate currencies actually protect weaker economies on a nation level. On an international level we have treaties which determine which currency we trade in and at what rate. |
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An example would be Africa, a person wouldn't be able to do enough to earn a nickle in many cases and would have no currency. |
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Also, you're idea is unoriginal, which you know. |
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Wow, I am a genius.. thats nice. |
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and the difference between this and the failed Euro experiment is ... ? |
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