The Case for a Single Currency
Authors: Barbara L. Neuby, Sandra M. Barrett
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Amidst the continued economic woes in the EU, lagging growth in China, the relative strengths and weaknesses of the dollar and other major currencies, and various and sundry articles about banker fraud, derivative-induced collapses, and general economic malaise, there lies an undercurrent of debate about a potential common monetary destiny: a single global currency. This paper evaluates eight currency candidates across the three roles of money and creates a typology of 70 nations using aggregate freedom scores from Freedom House and data from Bank for International Settlements (BIS) and the International Monetary Fund (IMF) to estimate banking system soundness. While some monetary units appear better suited for the monopoly role, none satisfies political criteria. Thirty-five nations scored well on total freedom and banking system stability and may serve as initial adopters if a currency candidate survives the political environment. Implementation concerns remain.