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The Future of Money: A Global Currency?

THE FUTURE OF MONEY A GLOBAL CURRENCY? CURRENCY IN CRISIS $4.4 TRILLION 37%: UK OTHER 39% is traded per day in foreign exchange markets, 16.5 TIMES $266 BILLION PER TRADING DAY more than the trading volume of all the stock markets of the world combined US JAPAN 250 trading days per year 17% 6% ONLY RELATE TO 2% OF FOREIGN EXCHANGE TRANSACTIONS REAL WORLD GOODS & SERVICES 98% ARE PURELY SPECULATIVE TRANSACTIONS. THESE SPECULATIONS TRIGGER FOREIGN EXCHANGE CRISES Mexico THE TEQUILA CRISIS // 1994-1995 The peso crashed under a floating regime from PPPPPPPI 4 Pesos to 7.2 to $1 in one week. Asia // 1998 Thailand // 1998 The baht reached its lowest point of The Thai stock market dropped 75%. Finance One, the largest Thai finance company, collapsed. в в в в BBBBBB 56 Bahts to $1 in January 1998. Indonesia / 1998 R = 1,000 RUPIAH Exchange rate plunged to over R South Korea // 1998 R R LOST $170.9 BILLION equal to 33.1% of their 1997 GDP 14,000 Rupiah to $1 for about six weeks in 1998 Russia // 1998 Russian Flu as a result of the crisis. Many banks were closed down including Inkombank, Oneximbank INFLATION reached The ruble depreciated from 6.43 to 7.86 per dollar. 84% Tokobank RRRRRRRR 9 welfare costs grew considerably. WORST INFLATION AWARD goes to... Zimbabwe suffered through one of the worst hyperinflation crises in history. Peak inflation was estimated at 6.5 SEXTILLION % in mid-November 2008 z = 1,000 Zimbabwe Dollars In 2009, Zimbabwe abandoned its currency. As of 2012, Zimbabwe still has no national currency; currencies from other countries are used in August 2005 1 US Dollar was worth $17,000 Zimbabwe dollars In July of 2008, inflation was so bad it took $66 Billion Zimbabwe dollars to buy 1 US dollar. $66 Billion $1 Billion $17,000 "50-50 CHANCE THE NEXT FIVE TO TEN YEARS WILL SEE A GLOBAL MONEY MELTDOWN" WWl according to Bernard Lietaer, author of Future of Money: Creating New Wealth, Work, and a Wiser World NATIONAL CURRENCY CRISES? "I think the biggest danger is... a currency war" "Governments from Germany, to Russia, to Brazil, to Thailand have expressed Worry that the world is plunging into a George Soros, Hedge fund icon chairman of Soros Fund Management currency war," EASING Bloomberg Businessweek reports. With so many central banks easing at once, the currency effect of each country's easing has been nullified. Loosening monetary policy causes depressed currency by lowering interest rates and boosts inflation, making currency less attractive to global investors. GOVERNMENTS what is FREQUENTLY PURSUE A WEAKER QUANTITATIVE EASING THIS "BEGGAR-THY- NEIGHBOR" POLICY CURRENCY IN TIMES OF ECO- NOMIC STRESS TO BOOST EXPORTS. of global currency devaluations helped spark the Great Depression in 1929. Here's one way to see it: when developed economies create massive amounts of money for their falling economies while delaying the timing of fiscal consolidation. But one country's devaluation often begets another, raising fears of a currency war. ALTERNATIVE CURRENCIES 1900 OCAL COMMUNITIES in the world. Including 100 in the US. COMMUNITIES NITLACA WE THOST Ithica, New York issues "ITHACA HOURS" as a form of paper currency. are now issuing their own currency, independently from the national money system. EIGHTH HOUR IN ITIHACA WE TRUST others communities in Canada, Australia, the UK or France use electronic money. IN ITHACA WE TRUS IN ITHACA WE TRUST Bater Transactions exchanges which do not use any money as medium of exchange. hamr .oNE HOUR The first decentralized digital currency system. It has no central authority and everything is anonymous Totalling almost $6.5 BILLION $46.5 It is an open-source software. It contains no ownership IN 1994 IN THE US AND CANADA. Maintained by a community of open-sourced developers. and is increasing three times faster than normal exchanges Switch to a Global Currency? How would it work? A currency specifically for multinational trade and contracts. U.S. Treasury Secretary TIMOTHY GEITHNER: "quite open" to the idea of an eventual move toward a global currency run by the International Monetary Fund. Would focus attention on long-term sustainable solutions without current regulations or taxation. Who would benefit? Developed nations due to no currency risk in international trade. Tinothe Gelifhner. Even playing field. The Downfalls Nations like China could no longer use currency exchange as a The most obvious downfall to the intro- means to make their goods cheaper on the global market. duction of a global currency would be the loss of independent monetary policy to regulate national economies. in the recent economic crisis in the United States, the Large German firms, which were already some of the most dominant in the world before the euro. Southern European nations began to demand more German goods, and all of this new money coming into Germany led to considerable prosperity. Federal Reserve was able to lower interest rates to unprecedented levels and increase the money supply in order to stimulate economic growth. These actions served to lessen the severity of the recession in the United States. Developing countries might benefit considerably with the introduction of a stable currency which would form a base for future economic development. Monetary policy could not be enacted on a country by country basis. Rather, any change in monetary policy would have to be made at the worldwide level. Supply and Printing The supply and printing of a global currency would have to be regulated by a central banking authority, as is the case for all major currencies. EURO AS A MODEL Despite the increasingly global nature of commerce the economies of each nation throughout the world still differ significantly and require different management. Who regulates the Euro? Euro is regulated by a supranational entity, the European Central Bank (ECB). Subjecting all countries to one monetary policy would likely lead to policy decisions which would benefit some countries at the expense of others. Why was it created? This central bank was established through a treaty amongst the members of the European Monetary Union. IS THERE A FUTURE FOR A GLOBAL CURRENCY? Only time will tell. Who manages it? To avoid political bias, the European Central Bank does not exclusively answer to any particular country. presented by: MONEYCHOICE.ORG Who oversees it? In order to ensure proper checks and balances, the ECB is required to make regular reports of its actions to the European Parliament. Sources: economic_crisis_in_Mexico DEVELOPED BY N NOWSOURCING]HEPUTdg increases-lead-in-foreign-exchange-trading-as-global-turnover-drops-7/

The Future of Money: A Global Currency?

shared by NowSourcing on Feb 14
This infographic takes a look at the future of money, and if global currency could be possible in the future.


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