Call For A Single World Currency

Once defined in terms of gold, its value will remain fixed and will be preserved through strict laws controlling its issuance, including quantitative annual ceilings that can never be exceeded. The world currency note will circulate along with national currencies, serve as a reserve asset, and become part of the international payments system. By becoming a full-fledged reserve asset, a world currency would cushion the real value of international reserves against inflationary policies of reserve currency centers and wide fluctuations in exchange rates. It would restrain extended balance of payments deficits of currency centers, and may contribute significantly to promoting financial stability and sustained world economic and trade growth. A third area for a world monetary reform is mandatory monetary discipline in member countries. While member countries in the euro zone have fully surrendered monetary sovereignty to the European Central Bank, reserve currency centers may have to surrender partially, not totally, their monetary prerogatives to a world central bank. Most indicated safeguards would be to establish rigorous annual ceilings on money supply not exceeding 5% a year (or a fixed multiple of a country's holdings of the constant purchasing power reserve currency above). Observing this law would be like observing the constitutional law of electing a US president for a four-year term. As constitutional laws have ruled over two centuries in the US and have preserved economic and political freedom, similar laws have to prevail in a monetary area to reduce discretionary powers of central bankers and attain monetary stability.