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2001, June: Malaysian Prime Minister proposes Single Global Currency

TOKYO (Nikkei)–Malaysian Prime Minister Mahathir Mohamad on Friday proposed the creation of a single international currency that would anchor global trade.

The currency, in which banking reserves would be held, should belong “to no one country,” Mahathir said in a speech here at the Future of Asia conference sponsored by Nihon Keizai Shimbun Inc.

“Rates of exchange should be based on this one currency which can be used for payment of all international trade,” he said. “Earnings in this currency must be immediately deposited with a nation’s central bank, and local currency issued for local transactions.”

Mahathir stressed that currencies “must never be traded as commodities.”

Devaluation of a local currency against the global currency should be decided by “a panel of central banks and the international bank,” he said. “No country should dominate international finance and commerce.”

Mahathir Proposes Single Global Currency, NikkeiNet, 9 June 2001


2001, March 13: U.S. Congressman Ron Paul, (Texas)

“There’s nothing to fear from globalism, free trade and a single worldwide currency…. The effort in recent decades to unify government surveillance over all world trade and international financial transactions through the UN, IMF, World Bank, WTO, ICC, the OECD, and the Bank of International Settlements can never substitute for a peaceful world based on true free trade, freedom of movement, a single but sound market currency, and voluntary contracts with private property rights…. The ultimate solution will only come with the rejection of fiat money worldwide, and a restoration of commodity money. Commodity money if voluntarily and universally accepted could give us a single world currency requiring no money managers, no manipulators orchestrating a man-made business cycle with rampant price inflation.”

Congressional Record, 13 March 2001


1999, 29 April, Alan Greenspan, Chair of the U.S. Federal Reserve Board of Governors

"One way to address the issue of the management of foreign exchange reserves
is to start with an economic system in which no reserves are required.
There are two. The first is the obvious case of a single world currency.
The second is a more useful starting point: a fully functioning, fully
adhered to, floating rate world.

All requirements for foreign exchange in this idealized, I should say,
hypothetical, system could be met in real time in the marketplace at whatever
exchange rate prevails. No foreign exchange reserves would be needed.

If markets are functioning effectively, exchange rates are merely another
price to which decisionmakers – both public and private – need respond.
Risk-adjusted competitive rates of return on capital in all currencies
would converge, and an optimized distribution of goods and services enhancing
all nations’ standard of living would evolve. "
Speech delivered to the World Bank Conference on Recent Trends in Reserve Management, Washington, D.C., April 29, 1999

1999, A Report from the European Parliament


"…SUMMARY:  Professor James Tobin first suggested a tax to “throw some sand in the wheels of speculation” in 1972. His proposal was for a charge of between 0.1% and 1% on the conversion of one currency into another. This would be too low to discourage long-term investment; but would represent a substantial annual rate on transactions which involved buying and selling a currency within a single day, week or month.

The tax would have three main purposes:

    to reduce exchange-rate volatility by reducing currency speculation;     

    to raise revenue for international organisations; and

    to make national economic policies less vulnerable to external shocks.

Fixed exchange rates.    Exchange-rate volatility can most obviously be eliminated by eliminating exchange rates themselves. Within the European Union, precisely this is being achieved through Economic and Monetary Union.

Failing the creation of a single global currency, volatility may also be reduced through systems of fixed exchange rates and currency boards; or – more modestly – by fixed margins of fluctuation, as in the case of the EMS Exchange Rate Mechanism. However, there is always the danger that anything short of full currency union will only reduce short-term volatility at the price of increasing disguised disequilibrium. This, in turn, can then lead to eventual large, forced and “chaotic” realignments – as was notoriously the case in September 1992 in relation to the ERM. ” Attempts to peg the exchange rate can be defeated…by rational and self-fulfilling attacks “(9).

(Economic Affairs Series, ECON 107 EN (PE 168.215) – March 1999)

1999, U.S. Dept of the Treasury


My remarks are organized in two parts. First, I offer some general comments on several aspects of currency arrangements. I follow with some observations on three features of the international financial system in the 21st century: the currency system, capital flows, and responsibilities of authorities in the major economies.

Currency Arrangements

A Common Global Currency

Many believe that a common global currency is the most attractive monetary arrangement from a global perspective; some wistfully identify such a regime with the 19th century gold standard. Under such a regime, foreign-currency transaction costs would be eliminated, foreign exchange crises would be a thing of the past, and a single money and capital market would allocate efficiently a global pool of savings to achieve maximum expected returns. To obtain the full promised potential from such a regime, wages and prices would have to be flexible, labor and capital would have to be mobile, and the scope for governmental intervention in the economy would have to be extensively circumscribed so that automatic mechanisms could be unleashed to adjust to changes in national economic and financial circumstances, for example, wages and prices (and, thus, real wages and relative prices) potentially would need to be free to decline and rise.

In the absence of those conditions, changes in global economic and financial circumstances in particular, shocks with differential impacts on national economies would be likely to lead to governmental intervention, at a minimum, to short-circuit the global systems automatic-Adjustment mechanisms. For example, governments would be tempted either to cushion the downward adjustment of wages and prices or to cushion the impact on employment and output of insufficient flexibility in wages and prices. Moreover, if the common currency were to be issued by a global monetary authority, it would be necessary to reach agreement on the objectives and political accountability of that authority. Finally, unless the monetary regime were accompanied by an approach to the global financial system with no public safety net, multi-national agreement would also be required on the supervision and regulation of that system. At the national level, the scope to provide lender-of-last-resort support to the financial sector would be very limited.

Although I can imagine convergence toward such a monetary regime at some point in the 21st century, I doubt it is a realistic possibility in the next few decades.

U.S. Treasury Press Release, 6 December 1999.


1994 United Nations Development Programme.

“A permanent single currency, as among the 50 states of the American union, would escape all this turbulence. The United States example shows that a currency union works to great advantage when sustained not only by centralized monetary authorities but also by other common institutions. In the absence of such institutions, an irrevocable unique world currency is many decades off. Human Development Report, page 40 (This section perhaps written by James Tobin, as inferred from article by Myron Frankman, from which a paragraph is presented in Academics and Economists)