What if we used the same currency across the world? - YouTube

In today’s video, we’re going to discuss what would happen

if all of us agreed to use the same currency across the world...

The concept of money has been around for a long time.

So long that it’s hard for us to imagine life without it.

But if you go back in time by 5000 years, you’ll see humans living in a society

where money didn’t exist and going about their lives just fine.

Back then, instead of spending money to buy something,

people just borrowed items from each other based on mutual trust

(which later came to be known as debt).

Sometimes, they exchanged items of the same value to get what they wanted

(which was otherwise called bartering).

These were simple methods and worked reasonably well for a while.

But both of them had their fair share of issues too.

With debt, you could only borrow from someone who already trusted you.

And on the other hand, while bartering, you had to find someone

who was interested in what you had to exchange.

This restricted the number of people you could trade with

and quickly became a problem for everyone.

So we found a solution by coming up with the idea of currency,

a universal good that could be exchanged for anything.

With a common currency in place, people were able to trade with pretty much anyone easily.

Since currency was usually made out of paper or metal,

it didn’t spoil like food, or grow older like cattle.

People could keep them for as long as they wanted.

It was also small, lightweight and practical enough to be carried around easily,

even in large amounts.

This was a revolutionary idea, and it paved the way for us

to work together and build better societies.

Everything was perfect and everyone lived happily ever after.

Except… it wasn’t and they did not.

It turned out, everybody had their own ideas for money around the world.

Some of us used gold and silver coins, others used paper notes,

and some of us even used cowrie shells.

Every civilization around the world came up with their own currency,

and it became hard for people to trade between regions.

Pretty soon, we were forced to come up with a system to help us

exchange different kinds of money.

Fast forward to today, thousands of years later, this system for converting currency

still exists in some form and is called foreign exchange (or forex).

While the underlying need for currency has stayed the same,

everything else in the world has changed completely.

Today, there are more than 180 currencies in circulation around the world,

created and managed by different countries.

We exchange more than 4.1 trillion dollars worth of money every day.

Currency trading is considered to be “the largest market in the world”.

But wait, what if we could make things simple again

and remove the concept of currency exchange altogether?

Let us take a closer look at a single currency system.

One of the biggest benefits of moving to a single currency

is that we will no longer need foreign exchange.

According to a report published by the Single Global Currency Association,

this would save us more than $400 billion in just transaction fees every year.

All of that money saved can be used for development

or can even help governments provide tax cuts to people.

No matter how people choose to spend their money,

they will not have to go through a mediator at any point.

This would make it very easy for them to compare prices globally

and buy foreign goods every

Additionally, companies will be able to sell their products across international markets

easily, which will not only increase competition but also lower prices, ultimately making things

better for the consumer.

When a single global currency is implemented, there will be no multi-currency fluctuations

and the value of money will stay the same across the world, similar to how it is today

between two European nations or two cities in the United States.

Since this new form of currency will not be associated with the economy of one particular country,

there will be no risk associated with holding it.

The value of your money will stay the same in the global market even when your country

is going through a tough time.

This will mean that individuals, companies and even banks

will no longer have to worry about their investments,

especially during unexpected events like wars, depressions and natural disasters.

With any additional costs and complexities out of the way, businesses will start making

more foreign investments and will create more opportunities together.

This is expected to increase the overall GDP of the world by $9 trillion

and can tremendously improve standards of living in developing countries.

All of these make it look like having a universal currency is a great idea.

So why don’t we go ahead and do it?

Well, hold on a second...

These are all hypothetical scenarios and we don’t know what challenges we’ll discover

if we try to do this in real-life.

But let’s try to make an educated guess.

For starters, moving to a single currency system will cause a lot of confusion

and make people lose their sense of wealth.

For example, if a single currency gets implemented, imagine the life of people living in Vietnam

where 1 US Dollar is worth over 22,000 Vietnamese Dong.

Some of them could go from being a billionaire to a millionaire overnight

and feel like they lost most of their wealth, even if they continue to have the same value of money.

Not only that, adopting a single currency for the whole world means that we’ll have

to agree on a one-size-fits-all monetary policy (similar to what we have with the Euro today).

While it has its benefits, it will offer no flexibility to independent nations

and make it harder for them to deal with their own unique economic problems.

For example, because they weren’t using a common currency, Iceland was able to manage

their economic crisis better by deprecating the value of the Krona.

However, even though Greece probably needs to do something similar,

an adjustment (if it can happen at all) will take years because they’ve agreed to use the Euro.

Meanwhile, other wealthier nations in Europe, like Germany, for example,

will have to shoulder the economic impact of countries like Greece, Spain and Portugal

who are facing their own economic challenges.

These sort of problems are already starting to show up in real-life with the euro,

a currency that was adopted by just 19 countries in the same region.

Imagine how hard it would be for us to achieve this with hundreds of countries from different

parts of the world facing very different challenges.

More than anything else, the hardest part of adopting a universal currency is setting

up a centralized union to regulate it.

In addition to the almost impossible task of deciding who would be in charge,

we’ll need all of our leaders to let go of some of their power

in order for the greater good of the entire world.

They will also need to agree on sound financial policies that work for everyone,

and not just for themselves.

While all of this might seem unlikely, it’s not impossible.

The world has already seen drastic changes made to foreign exchange in recent history.

With the introduction of floating currencies in 1971 and the Euro in 1999,

our leaders have shown that they are ready to try bold ideas to make life better for everyone.

So even if we don’t move to a single currency right away,

there’s a good chance that we will take a few steps in that direction.

With some countries, including Russia and China, as well as the United Nations expressing

interest, it might not be long before we get started.

Only time will tell if we’ll be able to do any of this successfully

and have a positive effect on our society.

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To learn more about this topic, check out some of these videos

that offer some great insights on currency exchange.

You can also check out our recent video on climate change

which talks about why we should come together to save our planet.

Thanks for watching and see you in the next one!