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Do we need a global currency right now

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In the year 2009, Timothy Geithner, who was USA's Treasury Secretary at the time, claimed that he is open to the idea of introducing a global currency, the responsibility of which would be taken by the IMF, that is, the International Monetary Fund. While a countless number of people were flabbergasted at the entire idea, introducing a global currency is an idea that has been pondered over by many. 

One of those people is a giant of the financial world, John Maynard Keynes. So, would the idea of a global currency work? Or better yet .

Do We Need A Global Currency

 do we even need a global currency? The most reliable way to evaluate whether or not the world needs a global currency is to look at its benefits as well as disadvantages. 

Benefits Of Having A Global Currency

The effects of a global currency would certainly be different for all of the countries in the world. However, there is no doubt that the effects would be positive as the countries will no longer have to experience currency risk when it comes to trading in the international market. 

In fact, the traders won't have to hedge their positions to avoid all the potential negative effects of fluctuations in their currency. That's not all, transaction costs when it comes to international finances would completely cease to exist, as there would be no need for them.

 A good estimate of how beneficial the elimination of transaction costs can be seen when European countries shifted over to the Euro. An estimate between 13 billion euros to 20 billion euros was saved, solely due to the elimination of transaction costs between the European countries.

Disadvantages Of Having A Global Currency

While having a global currency has its benefits, it also has its disadvantages. The most prevalent disadvantage of having a global economy is that it would lead to all of the countries losing their monetary policies, which are independent of each country and used as a means to regulate economies on a national level. 

The impact of this can be evaluated by looking at the economic crisis that the USA went through in the year 2008. To combat the severity and the negative effects of this economic crisis, the Federal Reserve lowered the United States interest rates by an extreme amount and simultaneously increased its money supply. 

These actions allowed the USA to give a boost to their economic growth thus being able to combat the severity to some extreme. If a global currency is introduced then countries will no longer be able to come up with the best-suited solutions to combat the economic crisis that they might face.

Now that we have understood some of the effects that would be experienced by the world if a global currency was introduced, we can figure out the answer. Do we need a global currency?

 The answer to this question is that, no, we do not need a global currency. In fact, introducing and implementing a global currency can be considered to be highly impractical, particularly, in today's economy.