The world with a single currency - what are the pros and cons

All of us have at least once imagined what would happen if the world imposed a single currency for executing any kind of financial activity. These thoughts are even more intense when we think about the crazy exchange rates when we want to travel or transfer money abroad. The rates are dramatically high and abolishing the different currencies might help the process to make it easier for not only us but the financial institutions as well. However, there is not a unique idea about this argument and we cannot say that adopting the single currency is not only good or bad. 

One world currency - disadvantages 

1. The Different economic conditions in different countries - one world currency means that before that it is important to create an authority such as the Central Bank that will have the right to print the currency and set the interest rate. However, here comes the fact that the economic conditions are varying from country to country. The implemented policy of the central bank should be fair-minded and hence should not favor one region over another. While having such big differences between the living conditions of many different countries, the practice would not be more efficient than the existing one.  
2.  Financial autonomy - the loss of financial autonomy is one of the main drawbacks that evolve while considering the single currency world. The government will have to give up on the practice that is quite beneficial to them. The Chinese case is an ultimate example of that. China, with an enormous economy, is exporting more products than importing them in the country, while the currency is devalued. The main reason for that is the fact that less dollars can buy more Chinese currency and people are more likely to want to buy cheaper products than expensive ones. And the devaluation of money happens by increasing the money supply in the country. When there is more supply, the value of each paper decreases, which is also caused either by printing more money or decreasing the interest rates. In the case of a single currency world, China would not have the authority to execute the same policy. 
3. Leading to the economic crisis - no matter how profitable the single currency market might be it creates problems for forex trading and currency speculation. Free transaction fees have always played a major role in the attraction of most traders and investors to the financial market. Those bonuses are possible to offer more likely in cases when the exchange rates give the companies the possibility for gaining significant profits, however, those benefits are used by the brokers for different purposes. The changes in the currency exchange rate make the companies gain advantages over time and benefit from the fluctuation, which will not be possible after the implementation of the single currency market, which might lead them to the financial crisis. 

When we talk about the need for unbiased actions from the central bank, some countries would still benefit more than the other ones. The ultimate examples are not any further than Germany and the EU. Germany was having a strong economy even before adopting the EU however, the german products for the other European countries were not as attractive. After the imposition of the Euro, which was a more devalued currency than the existing Deutsche Mark, German exports became very appealing. This is why the German economy prospered even further than the last several years. Other countries, especially in south-eastern Europe, could not devalue their currencies and make their products attractive, which directly caused the dwindle of exports and soaring debts. 

Benefits of the single currency 

We can talk a lot about the benefits of the implementation of a single currency market all over the world. There are a lot of details to consider and it might need quite a bit of time, however, the clear benefits are vivid. 

1. Currency exchange fees - one of the most disturbing moments while exchanging one currency for another is the extra fee that is involved in the process. Usually, the banks are the ones that do the job for you, this is why they require an additional fee for their services. The same happens when you want to transfer money abroad. You might even have to pay the same amount for transferring as you are actually sending. One currency market is a perfect solution in this case that would eliminate the major problem. It would be much more preferential during the travel time, or any kind of activities, that require foreign payments. 
2.  Utilization of money - single currency market gives us the perfect opportunity to better utilize the money we are holding. After the currency exchange fees are eliminated, the extra money that we had calculated for the additional fees, will be saved and not wasted. The first great example, in this case, is the Creation of the European Union, when the main idea was to increase the economic dependency of the European countries, that would have the spillover effect and lead the countries to live in a peaceful political environment. After that, the single currency market was adopted in 1999. It helped the countries to save up around 13 to 20 billion euros that would have been paid as a fee for the exchange since the economic relations were utterly active. 
3. Free trade - one of the main obstacles to free and effective trade was different exchange rates that were deterring the free flow of the trade. Single currency will directly have a positive impact on the importing and exporting goods since it will not require the additional charges. This is the main reason why the Economic and Monetary Union of Europe was created back then in 1992, and the common currency trade increased the efficiency of the trade, as well as the convenience. 

When there are important advantages of implementing the single currency market, the arguments of the other side are also valid. Unfortunately, the pros of creating a single currency market do not outweigh the cons of the same action. 

Summing It Up 

Finally, to sum up, after discussing, both the pros and cons of the single currency market, it is vivid that the world economic conditions are not organized the same way to make the single currency world work effectively. However, it does not mean that the discussion about it and working on creating a better solution should be terminated.  

After hard work and many years, the alternative in the form of cryptocurrencies has emerged that guarantees fast, cheap and easy transactions, which has the potential to replace forex transactions. However, due to the fact that there is no shared agreement from the governments’ side, where and how the cryptocurrencies might be used, the further implementation of them in our everyday lives is still under the question mark.