Is The Euro A Harbinger Of A World Currency?

Abstract

This paper speculated on the possibility or potential of a worldwide movement toward a single global currency using a study of the economic impact on the European Union (EU) of its single currency. Using the timeframe of the single currency adoption, three main factors of the EU were analyzed:1) the cost of living (inflation), 2) deficit spending, and 3) unemployment. It was hypothesized, for the sake of this study, that the effects on these three items would be roughly the same for the implementation of a single global currency. This assumption is based on the fact that the euro adoption was performed by countries whose economies and policies were not synchronized across-the-board in spite of the intention of the detailed treaty that foreshadowed the euro. A selective look at diverse literature perspectives touting both the achievements and downfalls of the euro adoption and implementation, news commentaries predicting the possibilities of further currency unification, and a brief history of currency, in general, was made. The finding of this study indicated that the euro did not appear to have a strong economic impact on its member countries based on the three criteria. That, coupled with the diversity of the world’s nations in categories ranging from political to technical to financial, lead to the conclusion that a single world currency in the foreseeable future is unlikely.