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Articles- Academic: about monetary unions and single global currency and related matters –

For older articles go to SGC Links : Academic Articles – Previous

This section includes articles from academic publications, or by economists or others elsewhere, including foundations or institutes.


27 February 2015. In the IMF Journal, “Finance and Development,” Kevin Hjortshoj O’Rourke wrote “Whither the Euro.” 

    Professor O’Rourke concluded the article, generally critical of the euro with the following: "If the euro is eventually abandoned, my prediction is that historians 50 years from now will wonder how it ever came to beintroduced in the first place."

The prediction of the Single Global Currency Association is that the euro will continue to expand to more European countries and will continue as the largest and best currency until incorporated into the Single Global Currency in some way.  As some point, 50 years from now and later, historians will wonder why the world took so long to adopt a Single Global Currency, and why so many economists continued to oppose it.


27 January 2015.  Jimmy Zhou writes paper advocating WCC (World Calorie Currency).  Zhou urges a Single Global Currency, linked to caloric resources.  Click for “A New Monetary Exchange System – The World Caloric Currency.”


1 July 2014.  Journal of Economic Literature annotation in June 2014 issue for 2014 Edition of book, The Single Global Currency – Common Cents for the WorldSee “Tear Sheet Copy”



24 May 2013.  Student John Kero writes seven page paper “Money is the Question”  which supports Single Global Currency.

The paper concludes...

    Whether using the system presented by the European Union or that of the United States with the Federal Reserve System, adopting a single world currency benefits the entire world, from the ground up.

25 January 2012. “The Dream of a World Currency.” 2009 interview with the late Tommaso Padoa-Schioppa in Il Sole-23 Ore.

Q:  "Thus the lesson for the future is a new single currency, as China is asking for?"

A:"Not only China is asking for it. Robert Mundell, on oe the most subtle economic minds of our time, and Paul Volcker, a very authoritative American former central banker, have been talking about it for a long time."

19 December 2011.  2008 Article, “A New Financial Architecture Based on a Global Carbon Standard,” by Molly Scott Cato proposing global currency based on global carbon units. 

Excerpts from the abstract...

    ….we need a global system where countries agree to limit their carbon dioxide emissions: this paper outlines the Contraction and Convergence model, which proposes that countries do this within a framework of equal per capita emissions for all global citizens…. The policy answer proposed is that of the Ebcu (environment-backed currency unit) — a neutral global trading currency to be used by countries that have also signed up to the C&C model.

11 December 2011. Article by SGCA member Fernando Lopes published about a Single Global Currency. The article is in Portuguese, on page 17 of the periodical, Revista da Procuradoria-Geral do Banco Central, Vol. 5, No  1 (Junho 2011) with the title, “Unidade na Diversidade: fundamentos do Direito Cosmopolita e sua função no estabelecimento de uma moeda mundial”  [English: “Unity in diversity: the principles of cosmopolitan law and its role in the establishment of a world currency”]

Excerpt from the abstract of the article….
    …After identifying the institutional factors that cause conflict and poverty will be analyzed the proposal offered by Keynes at Bretton Woods to create a world reserve currency, which will be done in order to determine whether this proposal fits to the fundamentals of Cosmopolitan [Law] in the the sense of being a means of eliminating injustice removing therefore the main obstacle to the achievement of peace.

4 July 2011. Thesis Summary for Masters Degree in Economics by SGCA member Mohammed Ibrahim:  “Evaluating the international monetary system and the availability to move towards one single global currency” (in English and Arabic in same document)

The summary begins...

    The topic of this master dissertation is: Evaluating the international monetary system and the availability to move towards one single global currency.

July 2011. Article by SGCA member Fernando Lopes, in Portuguese

“Unidade na diversidade: os fundamentos do direito cosmopolita e sua função no estabelecimento de uma moeda mundial” and Google-English., “Unity in diversity: the foundations of cosmopolitan law and its role in the establishment of a world currency”

From the SUMMARY in English...

   The objective of this work is to verify whether it is possible and how you can use the law to rebuild the current cosmopolitan world order according to principles of justice, a way to achieve everlasting peace and eliminate poverty. It will be exposed to the fundamentals of cosmopolitan law, contrasting them with the power relations prevailing in the international arena that are characterized as asymmetrical interdependence. Based on the premise that contemporary societies can be understood as systems that oscillate between cooperation and conflict, will be analyzing the institutional structures that underlie social tension, especially the functioning of the international monetary system. After identifying the institutional factors that cause conflict and poverty will be analyzed the proposal offered by Keynes at Bretton Woods to create a world reserve currency, which will be done in order to determine whether this proposal fits the fundamentals of Cosmopolitan Law the sense of being a means of eliminating injustice removing therefore the main obstacle to the achievement of peace.

23 March 2011 Case Study prepared by the IBS Case Development Centre " Single Global Currency: Is it Feasible? "  Authors:

S Korra, B Gopal and S Gollapalli

The Abstract begins...

   For almost 2,500 years, countries across the world have experienced multicurrency foreign exchange (FX) transactions and its erratic currency fluctuations. The daily turnover in currency markets rose to $3.2 trillion, which was more than 10 times the world GDP. Daily volumes of cross-currency swaps grew by 281% between 2004 and 2007. International corporations were participating more actively in FX market.

20 February 2011. “The Future of the Chinese Yuan in the International Monetary System”  by SGCA member, Mohammed Ibrahim, and published in the Sadat Academy (Egypt) Management Magazine in July 2010.

The abstract begins…

   The current global financial crisis has lead to rethinking of the need to reform the international monetary and financial system. An important part of that reform will be the future place of the Chinese yuan. That place should be large, by virtue of the actual data of the Chinese economy, like the size of the GDP of China as a proportion of world GDP, in addition the size of China’s trade and foreign direct
investment flow. As a part of this review of the Chinese economy it’s important to recognize the developments that happened in the internal Chinese monetary system in order to convert the yuan to an important international currency, and then identify the arrangements signed by China with its important commercial and
political partners to make that conversion.

1 February 2011.  “The implementation of Gulf Dinar among the GCC member countries and its possible impacts” by Abdelghani, Echchabi; Osman, Sayid; Isares, Mahamad; Khalid, Sorhiran and Zulhilmi, Zulkifli.  at the Munich Archives.

Abstract of the article.

   The paper analyses the issues surrounding the planned implementation of the Gulf Dinar among the six members of the Gulf Cooperation Council (GCC) – the United Arab Emirates, the State of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Qatar and the state of Kuwait. The paper will begin with laying down the foundation of attempting to draw any similarities and differences in terms of each country’s economic fundamentals. It will then assess the grand idea for a monetary union by looking at the pros and cons, intra-regional trade, labour and capital movement and the political will of all six GCC countries. Updated issues that may have hampered the introduction of the Gulf Dinar will then be analysed by looking at the economic convergence criteria and its implications. Comparison with the European Monetary Union will be made throughout the paper, where necessary. The paper ends will then come out with a number of suggestions that may improve the implementation of the Gulf Dinar. Lastly, the paper will discuss the political implications of the implementation of the Gulf Dinar as the sole currency for the Gulf countries.

19 January 2011. “The Econometrics of a Single Global Current in Accounting” by SGCA Director, Ratnam Alagiah, in the Asia Pacific Journal of Accounting and Finance. Volume 1, December, 2010.

Abstract of the article….

   This paper has two purposes. It addresses the issue of fair value, now prescribed by the accounting standards by the International Accounting Standards Board. Fair values, as defined by the accounting standards, implies exit prices and should be viewed and applied with caution. Exit prices require the determination of what hypothetical companies might pay. This method of determining value is costly, is difficult to apply within the fIrm, distorts information for users, mixes up exit price with value in use and entry values, includes transaction costs when they should be excluded, produces information that may be of little use and is readily manipulated. Such criticism of fair value requires that we rethink the use of fair value for accounting purposes. The second purpose is to provide the econometrics of a single global currency, in comparison to fair values, which evidence justify the need for a common measure, like a common currency, for accounting purposes.

13 April 2010. IMF article,  “Reserve Accumulation and International Monetary Stability” describes option of a Single Global Currency, using the name, "bancor" as originally proposed by Keynes.

Excerpts from the article….

  A more ambitious reform option would be to build on the previous ideas and develop, over time, a
global currency. Called, for example, bancor in honor of Keynes, such a currency could be used as a medium of exchange—an “outside money” in contrast to the SDR which remains an “inside money”.
   One option is for bancor to be adopted by fiat as a common currency (like the euro was), an approach that would result immediately in widespread use and eliminate exchange rate volatility among adopters (comparable, for instance, to Cooper 1984, 2006 and the Economist, 1988). A somewhat less ambitious (and more realistic) option would be for bancor to circulate alongside national currencies, though it would need to be adopted by fiat by at least some (not necessarily systemic) countries in order for an exchange market to develop…
    Nominal anchor. As a stable store of value, bancor could serve as a global nominal anchor. The variability of traded goods prices that is currently related to exchange rate volatility would be reduced. By not being tied as tightly as the SDR to the conditions of a particular economy or a group of economies, bancor could provide greater monetary stability, especially since key central banks retain monetary control under an SDR-based system and their respective economies and currencies would be expected to face episodic stresses and volatility (such as higher inflation or deflation).
[pages 27-28]


10 December 2009.  For their Masters in Business Administration degree, four students at Goizueta Business School, Emory University, in Georgia (U.S.), wrote their paper, “Single Reserve Currency- An analysis of the benefits and challenges with implementing a single reserve currency.”  The authors are Heidi Bacote, Daryl Grant, Rick Squires, Vinay Sumant and Ed Tatman, and they wrote the paper in their "Global Macroeconomic Perspectives" course, taught by Jeffrey A. Rosensweig.

Of the Single Global Currency, they concluded….

   This analysis shows that a SGC offers extensive benefits with primarily superficial obstacles so the true catalyst for change is a paradigm shift in global currency principles. This paper asserts the value of a SGC and the ideal of it being the end-state of world currencies even though it would obviate the need for the reserve currency strategy proposed. The move to a single reserve currency and SGCBs [supra-global currency central banks] can act as a tool to shift perceptions about a SGC and it is anticipated that as nations move into structures like the EMU they would be convinced of the value of a supra-national currency for commercial use….

18 November 2009. Journal of Financial Transformation publishes article by Morrison Bonpasse, " The world needs to begin planning now for a single global currency – and save the world trillions"

The abstract of the article ….

     "The recent global financial turmoil brought the world to the brink of monetary collapse, and reminded us yet again that the current multicurrency system has excessive risks and costs. The only long term alternative is to deliberately move to a single global currency, managed by a global central bank within a global monetary union, and the time to begin planning is now."

17 September 2009.  SGCA Director Ratnam Alagiah publishes article, “Writing the future: A theoretical justification for a uniform and universal system of currency in accounting for inflation” published in July 2009 issue of Journal of Modern Accounting and Auditing.

From the article….

    "This paper provides a theoretical algebraic representation of the problem [accounting for inflation, globally] and proposes that a permanent solution to the problem is the introduction of a single global currency.  A single global currency could ensure that all countries have the same rate of inflation (if any) and all financial reports could be measured using the same monetary unit….."

4 September 2009. IMF Working Paper 09/186, “One Money, One Market – A Revised Benchmark” by Theo Eicher and Christian Henn.

    The authors concluded, "Three main results emerge: first these simultaneous controls reduce the magnitudes but not the significance of CU [Currency Union] trade effects. Yet, individual CU’s may still generate trade effects exceeding 100 percent….."

20 February 2009.  Two articles in Journal of Banking and Finance among the 25 most frequently downloaded:

   “Global financial services and a global single currency”, (see 13 July, below), and

   “The significance of a world government in the process of globalization in the 21st century (see below, 15 February 2007).

17 November 2008.  Paper by Paul Klaffenbock “Reforming the Global Financial Architecture”. 

About the Single Global Currency, Klaffenbock concluded…

   The way to a single Global Currency (for advanced countries) could be cleared through the reduction of different currencies, but would only make sense if there was also policy coordination on many other issues.

13 July 2008. Article in Journal of Banking and Finance by Fariborz Moshirian: “The Significance of a world government in the process of globalization in the 21st century.” 

From the abstract: "The paper discusses how a globally integrated system, with a world government, a world parliament and a world central bank as its components, is no longer an idealistic concept."

And from the article: "One can see that in such an integrated global system, a world central bank with its own international currency will tackle some of the international financial challenges currently facing financial markets and financial institutions….

[For more about Fariborz Moshirian’s support of a Single Global Currency see below:

15 February 2007 . “Global financial services and a global single currency” by Fariborz Moshirian in Journal of Banking and Finance, Vol. 31, Issue 1, January 2007.]


20 June 2008. “Monetary Systems in Developing Countries: An Unorthodox View”  by Jose Luis Cordeiro  IDE Discussion Paper No. 154.

Excerpts from the abstract….

     It begins with a historical review and a summary of fixed versus flexible exchange rate systems. Then it compares the experiences of recent currency unions, mostly unilateral, and their relative economic performance during the past currency crises in Latin America, East Asia and Eastern Europe. A set of issues is discussed in order to weigh the overall costs and benefits for several economies….

   Free banking is also considered in a fast-changing world where there will probably be fewer but better currencies. Not just the euro is a reality now, but maybe the “amero” and the “worldo” or the “mondo” very soon.

[Jose Cordeiro is a member of the Board of Advisors of the Single Global Currency Association.]


18 June 2008. “Vom Bancor zum Euro. Und weiter zum Intor? (From the Bancor to the Euro. And Further on to the Intor?)” by Heinz Handler

This paper is in German.  The Abstract in English….

"The current paper analyses the similarities between the Bretton Woods system (BWS) and the Eurozone and looks into the future of the world monetary system. The gold standard, the Keynes Plan and the White Plan are identified as the most important sources of ideas that formed the BWS…. The Eurozone is also considered good practice for any reform of the international monetary system. Given the diverging political and economic goals of the major currency blocks, it may be questioned, however, whether the success of the euro also furthers the idea of developing a single world currency."

20 May 2008. William Steding, graduate student at Norwich University in Vermont, U.S., writes, “The Globo”, about a Single Global Currency.

Excerpt from the essay…

     "The most effective form of simplification and stabilizing influence has been largely ignored by both statesmen and scholars of international political economy: constructing a path to a global currency – the “globo.” In the same way that the Bretton Wood’s fixed-rate exchange system and gold-backing are artifacts of the global financial system, so too is a world of 140+ currencies that lean on the back of the dollar. The path to a global currency is one of gradual contraction; spurred by financial crises; enlightened sovereignty; accompanied by institutional maturation; and supported by hegemonic leadership….

Notwithstanding the hundreds of billions of dollars in transaction costs; the negative effects on trade, asset values and GDP; pesky, omnipresent current account imbalances; dis-economic, zero-sum business decisions; and induced volatility due to currency speculation; in my view, the greatest argument for one global currency – the globo – is the simple fact that in the complexity globalization provides and accelerated velocity of currency trading, we are losing our capacity to serve the three functions of monetary management: liquidity, adjustment and confidence.

[This paper should inspire others to think and write about a Single Global Currency.]

11 April 2008.  Ryan Stoa, a student at McGill University, writes a paper, “The Single Global Currency – A Developing World Perspective” 

   He concluded….

   Nonetheless, I conclude with emphatic conviction that the benefits of a single global currency greatly outweigh the costs. Therefore, the currency is recommended for adoption by developing countries. This need not mean immediate adoption, but it must be acknowledged that the current multicurrency framework is unsustainable, and every day the poor lose out from the arrangement. Mobilizing the masses to prepare for the massive transition to a global currency must therefore begin immediately. It is an economic and ethical imperative, a remedy that hurts few and helps many.

   The need for a single global currency is not only immediate, it is pressing. As the international financial system and day-to-day transactions become increasingly electronic and inter-connected between people and nations, the boundaries of monetary nationalism are being constantly eroded. Nonetheless, if we continue down the multicurrency path into a fully electronic and perfectly mobile financial system, and if national currencies survive this transition, we risk permanently ceding the ability to make worldwide monetary reforms possible. We cannot delay.

[Ryan’s paper is also posted at  “ – Ryan Stoa Thesis”]

28 February 2008.   India Chapter Chair, Ankur Agarwal publishes article, "Single Global Currency – Common Cents for World," in student magazine, INFINITEETI, at India Institute for Foreign Trade (IIFT-Kolkata).

The article, on pages 7-10, begins…

     " ‘A global economy requires a global currency?’ – Paul Volcker, former US Fed-eral Reserve Chair.  How does this sound? A single currency for the whole world! Doubts had been raised when Euro was adopted by the EU countries. The practicality of single currency for Europe was questioned. But ‘Single Global Currency‘ takes the economics to a whole new level. Does it sound superfluous? Well, all I can say is -think about it….

    This theory is doing rounds in USA and Europe but has not really caught up in Asian countries. We, the students at IIFT Kolkata, have taken the initiative

to spread the word in India through articles in media. And we start it with our very own finance magazine, Infineeti."

[Good work Ankur!  The movement toward a Single Global Currency is gaining momentum around the world.]

4 February 2008. Morrison Bonpasse paper, “The Single Global Currency – Common Cents for Commerce” is accepted for 8th International Business Research Conference in Dubai on 27-28 March 2008.

However, lack of funding precludes his attendance and delivery of paper.

  See acceptance letter from Professor Zia Haqq.  The paper has also been posted at the Munich Personal RePEc ARchive (MRPA) where it is Document #7002.

15 December 2007.  Ratnam Alagiah of Australia, and a Director of the Single Global Currency Assn. writes “A THEORETICAL JUSTIFICATION FOR A SINGLE GLOBAL CURRENCY IN INTERNATIONAL ACCOUNTING”

The abstract for the article reads…

  This paper submits that the advantages gained by introducing a single currency at the domestic level, equally applies to the economy at the global level. The advantages gained are, 1. a reduction of the inflation rate to one common rate (if required) amongst all countries, 2. a possible reduced interest rate, 3. an expansion in investment, 4. an increase in development and trade due to the removal of uncertainty, 5. the reduction in transaction costs, and 6. the reduction in the cost of capital (Moshirian, 2004, p. 306). A single global currency has immediate implications in international accounting. It presents an opportunity for the permanent removal of problems associated with accounting for inflation. This paper addresses the phenomenon of inflation and how accounting measurement and valuation associated with inflation is removed by the introduction of a single global currency.

[The paper will be presented to to the Conference of the International Accounting Section of the American Accounting Association, San Diego, February 2008, at

9  December 2007.  “The Single Global Currency – Common Cents for Business”published in November “Proceedings” (pp 46-55) of International Academy of  Business and Economics.

The article by Morrison Bonpasse concludes….

    Implementing the Single Global Currency will bring considerable benefit to almost everyone in the world and business can play a substantial role in moving the world in that direction. The years 2024, 2034 or even 2044 are not so far away that business cannot begin researching, planning and organizing now.

[The article is also posted at the Munich RePEc Personal Archive (MPRA).]

September 2007.   Davide Furceri publishes article,  “From Currency Unions to a World Currency: A Possibility?” in the International Journal of Applied Economics .  He wrote, “Moreover, the creation of a world common currency area is not as unrealistic as it might seem at first sight.”

9 June 2007.  June issue of Journal of Economic Literature (Vol. 45, No. 2) carries note about The Single Global Currency – Common Cents for the World.

  The "tear sheet copy" states, "The following annotation will appear in the June 2007 issue of the Journal of Economic Literature (Volume 45, No. 2) and in the American Economic Association’s electronic publications: e-JEL, JEL on CD, and EconLit.

       BONPASSE, MORRISON.  The Single Global Currency: Common Cents for the World.  Newcastle, Maine: Single Global Currency Association, 2006. Pp xvi, 408. $19.00, paper. ISBN 978-0-9778426-05.  JEL 2007-0484

   Explores the benefits of a single global currency, managed by a global central bank within a global monetary union.  Discusses the expensive, complex, and hazardous multicurrency foreign exchange world; coping with the multicurrency foreign exchange system; economists viewing the pre-euro multicurrency system and its exchange rate regimes; monetary unions; the single global currency – origin, benefits, and costs; economists viewing the single global currency; how to get there from here; and the single global currency world – in 2024.  Bonpasse is Founder and President of the Single Global  Currency Association. Bibliography; index.

16 May 2007.  Publication of latest issue of Economie Internationale, by CEPII in France, titled “The Economics of Regional Monetary Integration”

See, especially, the “Introduction to issue” by Michel Beine,  Agnes Benassy-Quere, and Rolf Langhammer. Also, see “What do we know about Currency Unions?” by  Michael Artis, and “New Monetary Unions in Africa: a major change in the monetary landscape?” by Paul Masson; and  “Can NAFTA be a stepping stone to monetary union in North America?” by Dominick Salvatore.

April 2007. Volume 19 of the Journal of Financial Transformation on “Monetary Union”.

   With most of the articles about the European Monetary Union (and two of those on how to exit the EMU), the Issue explores several aspects of monetary unions.

15 February 2007. “Global financial services and a global single currency” by Fariborz Moshirian in Journal of Banking and Finance, Vol. 31, Issue 1, January 2007.


   The purpose of this paper is to highlight the evolution of financial institutions in the context of increasingly volatile foreign exchange markets. The paper discusses the importance of the formation of a single currency in the US in the 19th century and the formation of the Euro in the 20th century for reducing volatility in foreign exchange markets that have assisted financial institutions’ international business expansion. The paper also considers some of the key assumptions of an optimal currency theorem such as labour mobility and argues that in the 21st century, more comprehensive financial market integration and a single global currency could emerge, provided that capital mobility and hence foreign capital flows continue meeting labour in the host countries for production rather than the other way round.

10 October 2006.  “AN ANALYSIS OF MACRO-ECONOMIC CONVERGENCE IN SADC (South Africa Development Community)”

by Jannie Rossouw in the South Africa Journal of Economics, Volume 74 Page 382  – September 2006
The abstract reads….

One of the goals of the Southern African Development Community (SADC) is macro-economic convergence leading to monetary unification and a single central bank. This goal is aligned with the goal of the African Union to build a monetary union for the entire continent in stages, starting with each of the subregions, of which SADC forms one important region. Despite views to the contrary, the current degree of compliance with the Maastricht criteria for convergence and membership of the European Union, shows that the challenges facing a SADC monetary union would not be insurmountable if the convergence criteria are viewed as permanent goals, rather than preconditions.

(emphasis added on website.)

3 July 2006. Three Working Papers from the Austrian National Bank about single global currency: 

1. "Proposal for a Common Currency among Rich Democracies" by Richard Cooper.

2. "One World Money, Then and Now" by Michael Bordo and Harold James,

3. "Exchange Rate Arrangements and Disarrangements: Prospects for a World Currency", a discussion of both articles bySergio Schmukler.

Abstract for all three…..

     Paper 1: This paper suggests that some time in the not-too-distant future the governments of the industrialized democracies – concretely, the United States, the European Union, and Japan – should consider establishing a common currency for their collective use. A common currency would credibly eliminate exchange rate uncertainty and exchange rate movements among major currencies, both of which are significant sources of disturbance to important economies. One currency would of course entail one monetary policy for the currency area, and a political mechanism to assure accountability. This proposal is not realistic today, but is set as a vision for the second or third decade into the 21st century. Europeans, in creating EMU, have taken a major step in the direction indicated. Their idea could be taken further. Paper 2: In this paper, we look at the major arguments for monetary simplification and unification before explaining why the nineteenth century utopia is an idea whose time has gone, not come.


17 June 2006  Adopting a common currency basket arrangement into the ‘ASEAN plus three’

by Eiji Ogawa and Kentaro Kawasaki, a Discussion paper from Research Institute of Economy, Trade and Industry (RIETI), Japan.


   East Asian countries, for example “ASEAN plus three countries” (China, Korea, and Japan), have been well cognizant of importance of the regional financial cooperation since the Asian currency crisis in 1997. They have established the Chiang Mai Initiative (CMI) to manage currency crises. However, the CMI is not designed for “crisis prevention” because it includes no more than soft surveillance process as well as a network of currency swap arrangements. The surveillance process should be conducted over intra-regional exchange rates and exchange rate policies of the regional countries in order to stabilize intra-regional exchange rates in a situation of a strong economic relationship among the regional countries. On one hand, the regional exchange rate stability is related with an optimum currency area. Based on a Generalized PPP model, which detects a cointegration relationship among real effective exchanges rates, we investigate whether the region composed of “ASEAN plus three countries” is an optimum currency area. In the investigation, our interest is focused on an issue whether the Japanese yen could be regarded as an “insider” currency as well as other East Asian currencies. Or, is the Japanese yen still an “outsider” which is used as a target currency of foreign exchange rate policy for other East Asian countries. We employ a Dynamic OLS to estimate the long-term relationship among the East Asian currencies in a currency basket. Our empirical results indicate that the Japanese yen works as an exogenous variable in the cointegration system during a pre-crisis period while it works as an endogenous one during a post-crisis period. It implies that the Japanese yen could be regarded as an insider currency as well as other East Asian currencies after the crisis although it is regarded as an outsider currency as well as the US dollar and the euro before the Asian crisis.

2 June 2006 “Stylized Facts on Bilateral Trade and Currency Unions: Implications for Africa”  Working Paper 06/31,

by Tsangarides, Charalambos G. and Ewenczyk, Pierre of the IMF and Hulej, Michal of the University of Warsaw.

From the summary at the IMF site:

This paper explores and quantifies several aspects of the performance of currency unions using an augmented version of the gravity model and focusing on two samples, the world and Africa. Our empirical findings suggest that, in principle, membership in a currency union should benefit Africa as much as it does the rest of the world. In addition, we find evidence from both samples that the effect of currency unions on trade is large, almost a doubling; currency unions are associated with trade creation, increase price co-movements among members, and make trade more stable; and longer duration of currency union membership brings about more benefits, although with some diminishing returns.

4 May 2006. “One World Money, Then and Now” by Michael Bordo and Harold James.

From the abstract at NBER….

    The case for monetary simplification and unification has been made since the middle of the nineteenth century. It rests on four principal arguments ;reduced transaction costs; establishing credibility; preventing bad policy in other states; political integration via money. In this paper we argue that the case for monetary integration is becoming increasingly less persuasive. In making our case we posit a different concept of money to the one that underlay the nineteenth century discussions which we term "Newtonian" since it was based on the assumption of a single reference external to the state reflected in the definition of value in terms of precious metals. In the twentieth century, views of money have shifted to a more " Einsteinian" or relativistic conception. Measures of value that move relative to each other are helpful in terms of dealing with large shifts in relative prices that affect different countries very differently. In the current age of globalization, "Einsteinian" money is capable of accommodating shifts that were politically destructive in the " Newtonian" world.

15 November 2005.  Dissertation, “Single Global Currency” (in German) by Steffen Kanz of Gotha, Germany at the International Management International Business School at the Bad Homburger Academy.   This paper discusses the work of Robert Mundell and the Single Global Currency Association, and the prospects for a single global currency.

[Also linked is a partially translated, by "Google", version in English.  When "Google’s efforts are supplemented by humans, a more complete translation will be posted here.]

27 October 2005.  “Monetary and Exchange Rate Policy Coordination in ASEAN 1”  by William Branson and Conor Healy


   This paper develops the basis for monetary and exchange rate coordination in Asia as part of a package of monetary integration that could support growth and poverty reduction. This could be achieved directly through coordinated exchange rate stabilization, and indirectly through the implications of this for reserve pooling and investment in an Asian development fund (ADF) and through development of the Asian bond market (ABM). Macro policy coordination could be viewed as a necessary condition for further development of both reserve pooling via the Chiang Mai Initiative (CMI) and of the ABM. The paper analyzes the trade structure of ASEAN and China in terms of both geographic sources of imports and markets for exports, and of the commodity structure of trade. The similarities of the geographic and commodity trade structures across the region are consistent with adoption of a common currency basket for stabilization, and with an argument for monetary integration across the region along the lines of Mundell (1961) on optimum currency areas. The paper constructs currency baskets and real effective exchange rates (REERs) for the countries in the region. Since their trade patterns are quite similar and their policies are already implicitly coordinated, their REERs tend to move together. This means that ASEAN and China are already moving toward integration in practical effect. Explicit movement toward coordination could support surveillance and reserve-sharing under the CMI, and release reserves to be invested in an ADF.


16 October 2005.   “Vulnerability to Shocks in EMU: 1991-2004” by Oscar Bajo-Rubio and Carmen Diaz-Roldan, both of the Universidad de Castilla-La Mancha

Abstract of this important article which deals with a concern of many economists who consider monetary unions: the coping with "shocks"…

In this paper we analyze the nature of the shocks hitting the EMU member countries over the period 1991-2004, as well as for the two subperiods before and after 1999, i.e., the start of EMU. To this end, we first evaluate the relative importance of symmetric vs. asymmetric shocks, and then extract their temporary component. Our final aim would be assessing the vulnerability of the EMU countries to temporary and asymmetric shocks, which would be the most harmful case for the operation of a monetary union.


14 October 2005.  “Is Operational Hedging a Substitute for or a Complement to Financial Hedging? “  by Young Sang Kim of Northern Kentucky University, Ike Mathur of Southern Illinois University and Jouahn Nam of Pace University


     This paper investigates operational hedging by firms and how operational hedging is related to financial hedging by using a sample of 424 firm observations, which consist of 212 operationally-hedged firms (firms with foreign sales) and a size and industry matched sample of 212 non-operationally-hedged firms (firms with export sales). We find that non-operationally-hedged firms use more financial hedging, relative to their levels of foreign currency exposure, as measured by the amount of export sales. On the other hand, though operationally-hedged firms have more currency exposure, their usage of financial derivatives becomes much smaller than that of exporting firms. These results can explain why some global firms use very limited amount of financial derivatives for hedging purpose despite much higher levels of currency risk exposure. We also show that hedging increases firm value.


13 October 2005.  “To Be or Not to Be in the Euro? Benefits and Costs of Monetary Unification as Perceived by Voters in the Swedish Euro Referendum 2003”  by Lars Jonung, European Commission


     The Swedish referendum in September 2003 on adopting the euro or keeping the domestic currency, the krona, represents a unique event to examine the public’s perceptions of the benefits and costs of monetary unification. The voters chose between the two polar cases of exchange rate regimes: Either a freely floating exchange rate or membership in a monetary union.

    Three major conclusions emerge from the analysis of the exit poll surveys gathered on the day of the referendum.

    First, the optimum currency area theory proves to be a constructive framework to predict voting behaviour across socio-economic groups and regions in Sweden, assuming voters behave in their self-interest.

    Second, the distribution of the expected benefits and costs across groups was a major determinant of their voting behavior. As predicted by theory, the Yes-vote was strongest among voters employed in the tradable sector, in high growth regions as well as among high-income earners and well educated. The No-vote was strongest among voters employed in the non-tradable sector, in particular in the public sector, and among low-income earners, the unemployed and the less educated – in short, among groups dependent on public-sector transfers to maintain their living standards in the event of adverse economic shocks.

    Third, political attitudes towards the European integration process heavily influenced the views of the voters towards the euro.


13 October 2005.  “Asymmetric Shocks and Risk Sharing in a Monetary Union: Updated Evidence and Policy Implications for Europe”  by Sebnem Kalemli-Ozcan, University of Houston and Bent Sorensen, Univesity of Houston, and Prof. Oved Yosha (deceased) of Tel Aviv University.


     We find that risk sharing in the European Union (EU) has been increasing over the past decade due to increased cross-ownership of assets across countries. Industrial specialization has also been increasing over the last decade, and we conjecture that risk sharing plays an important causal effect by allowing countries to specialize without being subject to higher income risk even though the variability of output may increase. We believe that lower trade barriers may not have played a dominant causal role during this decade, because the effect of lower trade barriers has probably already played itself out. We further find that the asymmetry of GDP fluctuations in the EU has declined steeply over the last two decades. This may be due to economic policies becoming more similar as countries were adjusting fiscal policy in order to meet the Maastricht criteria; however, a similar result was found for U.S. states so the finding may be due to a different nature of the shocks to the world economy in the 1990s. We expect to see a further rise in risk sharing between EU countries, accompanied by more specialization. The resulting increase in GDP asymmetry should be minor, however, and will have small welfare costs, because increased risk sharing should lower income (GNP) asymmetry.


13 October 2005.  “Exchange Rate Regimes and Economic Linkages” by Jong-Wha Lee, Korea University/NBER and Kwanho Shin, Korea University/Claremont Mckenna College.


     We investigate how the exchange rate regime influences economic linkages across countries. We divide the exchange rate regime into three classifications: currency union, peg and floating exchange rates. Unlike most studies solely focusing on the relationship between anchor and client countries, the exchange rate regime between any two countries is inferred based on their relationship to the common anchor currency. Then we empirically explore how the various exchange rate regimes impact on bilateral trade, output co-movement and financial integration. Financial integration is measured by the degree of risk sharing reflected in consumption co-movement relative to output comovement. We find that, while currency union has the greatest effect, the peg regime also significantly boosts trade. We also find that, while the peg regime contributes to both output and consumption co-movements, the currency union strengthens only consumption co-movement and possibly lowers output co-movement. These findings are interpreted that the currency union, the strictest form of pegged regimes, leads to higher industry specialization and better risk sharing opportunities than the less strict peg regime.

13 October 2005.  “Monetary and Financial Integration: Evidence from Portuguese Borrowing Patterns”   by Mark Spiegel, Federal Reserve Bank of San Francisco


     This paper examines the impact of European Monetary Union (EMU) accession on bilateral Portuguese international borrowing patterns. Using a difference-in-differences methodology, I demonstrate that Portugal’s accession to the EMU was accompanied by a change in its borrowing pattern in favor of borrowing from its EMU partner nations. This extends the evidence in the literature that overall international borrowing is facilitated by the creation of a monetary union, and raises the issue of financial diversion. The results are shown to survive a wide variety of robustness checks and are corroborated by preliminary evidence concerning Greece’s accession to EMU in 2001.


12 October 2005.  “Purchasing Power Party in the Eastern Caribbean Currency Union”    by Raj Aggarwal and Walter Simmons.


   There is increasing interest in regional trade, investment, and currency blocs, and in the optimal public policies for such blocs. There is also much managerial interest in the co-movement of exchange rates in a region. The Eastern Caribbean Currency Bloc is one of only three (and one of the longer lasting) multi-country common central banks in the world and is the only such bank in which member countries pool all their foreign reserves. While it is an important economic region especially for the United States, most studies of regional exchange rate relationships have not examined the nature of Caribbean exchange rates. This paper documents for the first time that purchasing power parity holds for each exchange rate and many real exchange rates are cointegrated and move in a bloc in the Eastern Caribbean region over the 1980s and 1990s.

1 October 2005.  “Designing Poland’s Macroeconomic Strategy on the Way to the Euro Area”  by Michal Brzoza- Brzezina (National Bank of Poland)

   In this paper we discuss selected aspects of Poland’s road to the euro zone. Our attention focuses on the proper design of macroeconomic policy during the accession period. We address the issue of entering ERM II, with special attention to the choice of central parity, fluctuation bands, possible revaluation of the parity and sharing the burden of interventions with the ECB. Further we concentrate on the issue of a simultaneous fulfilment of all convergence criteria. We point at the central role of fiscal austerity in providing a save framework for fulfilling the inflation, exchange rate and, obviously, the public deficit criteria. The key role of timing is accentuated.

1 October 2005.  About the world’s oldest currency union: “The Constitutional Creation of a Common Currency in the U.S., 1748-1811: Monetary Stabilization versus Merchant Rent Seeking”  by FarleyGrubb, University of Delaware.


   "… The fact that otherwise-sovereign states within the United States are not legally allowed to issue their own currency, thus creating a single currency zone for the whole United States based on the U.S. dollar, is commonly usd as an example for emulation and as justification for policy choices, such as the current move toward a European currency union based upon the euro…."


20 September 2005.  “Out in the cold? Iceland’s trade performance outside the EU”  by Thorarinn G. Petursson and Francis Breedon.


    Although entering a currency union involves both costs and benefits, an increasing body of research is finding that the benefits in terms of international trade creation are remarkably  large. For example, Rose (2000) suggests that countries can up to triple their trade by joining a

currency union. If true the impact on trade, income and welfare should Iceland join EMU could be enormous. However, by focussing simply on EMU rather than the broad range of currency unions studied by Rose, we find that the trade impact of EMU is smaller but still statistically

significant and economically important. Our findings suggest that the Iceland’s trade with other EMU countries could increase by about 60% and that the trade-to-GDP ratio could rise by 12 percentage points should Iceland join the EU and EMU. This trade boost could consequently

raise GDP per capita by roughly 4%. These effects would be even larger if the three current EMU holdouts (Denmark, Sweden and the UK) were also to enter EMU.


15 September 2005. “The effects of inflation targeting on macroeconomic performance”  by Thorarinn G. Petursson, Central Bank of Iceland.


An increasing number of countries have adopted inflation targeting since New Zealand first adopted this framework in early 1990. Currently there are 21 countries using inflation targeting in every continent of the world. This paper discusses the economic effects of inflation targeting. The main conclusion is that inflation targeting has largely been a success. The new framework has made central banks, which previously lacked credibility, able to change the way they do monetary policy towards what is commonly considered best practice. In many respects they have even been leading in creating a new benchmark for how to formulate monetary policy.


13 September 2005.  “How Comprehensive is Comprehensive Income? The Value Relevance of Foreign Currency Translation Adjustments ” by Jo Ann Pinto, Montclair State University, U.S.


     Prior empirical research has been unable to forge an unambiguous link between foreign currency translation adjustments, which are an element of other items of comprehensive income, and firm valuation. This study adds to the existing literature by empirically testing the value relevance of foreign currency translation adjustments in an earnings and book value model. Interaction terms, which serve as proxies for the theoretical sources of exchange rate exposure, are included in the estimating equation. The main finding of this study is that foreign currency translation adjustments are significantly value relevant when their parameter estimates are allowed to vary in the cross-section.


2 September 2005.  “Investment, devaluation, and foreign currency exposure: The case of Mexico” by Mark Aguiar.


This paper studies firm-level investment in the wake of the Mexican peso crisis of 1994. While exporters outperform nonexporters in terms of profits and sales after the devaluation, their investment is constrained by weak balance sheets. Specifically, we find that firms with heavy exposure to short-term foreign currency debt before the devaluation experienced relatively low levels of post-devaluation investment. The data also imply that increased sales uncertainty after the peg’s collapse deterred investment, particularly in the tradable sector. The results confirm the recent theoretical literature’s focus on weak balance sheets as driving the recessionary impact of devaluations in emerging markets.

[Much has been written about how countries have to keep their own currency so they can respond to “shocks” by devaluing their currencies so they can increase exports, but not much about the downsides of such devaluations.  Hence the value of this article.]

1 September 2005.  “One Money, One Cycle? Making Monetary Union a Smoother Ride”   by Christine de la Maisonneuve; Claude Giorno; Peter Hoeller of the OECD.

In recent years the euro area has shown less resilience to the negative and largely OECD-wide common shocks than the English-speaking countries, but most of the smaller euro area countries have fared better than the large ones. This paper reviews policy issues that are important in fostering a speedy adjustment to shocks. We argue that the small countries are well placed to adjust swiftly to asymmetric shocks, because they are well integrated with the rest of the area. An activist fiscal policy is not needed and also not powerful enough to smooth the cycle….