There are several non-exclusive ways to achieve a Single Global Currency. The routes listed below are considered realistic. They are: Monetary Union, Monetary Linking of Major Currencies, Political Union and Adoption of Another Currency.
The best known monetary union is the European Monetary Union which established the euro according to the plan in the 1991 Maastricht Treaty. Currently (September, 1, 2003) there are 12 countries which share this common country. As there are only 191 members of the United Nations, that means that the creation of the euro achieved 6% of the total. If another 12 nations join over the next ten years (Sweden, Denmark, United Kingdom, Finland, Norway, Poland and other Eastern European countries), the percentage of the total will be 12%, and they will account for a larger percentage of the economic activity of the world.
Another monetary union is the Eastern Caribbean Monetary Authority which provides a common currency for 8 Caribbean countries. (See SGC Links, Related Sites)
Currently under consideration is the monetary union of the six nations of the Gulf Cooperation Council. They hope to have a common currency launched by 2010.
Earlier monetary unions, but less known today for that achievement, are the United States of America and 19th century Germany.
Each of these monetary unions was accompanied by a different level of political union. It is not yet clear how much political union, or even economic coordination, is required for a successful monetary union..
Monetary Linking of Major Currencies
Robert Mundell has suggested at the World Economic Forum and elsewhere that the three major currencies (dollar, euro and yen) could be linked together or pegged to ech other in a fixed ratio. In order to do that, there would have to be an agreement among the three central banks to march to the same drummer. That would still leave the other countries/currencies of the world floating, but it would be in a more stable currency exchange world.
For a few of the current 191 member states of the United Nations, political union is a possible next step toward a single global currency, as it was for Democratic Republic of Germany which united with the Federal Republic of Germany in 1990. Another nation which might take this route to the SGC is North Korea. When two or more countries join in a political union, they are, almost by definition, joined in a monetary union.
Sometimes, political union occurs by military conquest of an unwilling country. While a common currency often results from such a conquest, this is not an acceptable route.
The opposite of political union is disunion. Every time that an existing country divides itself in some way, e.g. Czechoslovakia into Czech Republic and Slovakia, there will be the risk of forming an additional currency which will tend to stall the march toward a single global currency.
This is a new word which comes from the term, "dollarizing" which originally describes the adoption by a country of the U.S. Dollar as legal tender for that country. Some, such as Kurt Schuler, now use "dollarization" to describe the adoption by a country of ANY other country’s/monetary union’s currency. See his list of Officially Dollarized Economies, June 2002
Adoption of another currency – Dollarization
Several countries ( Panama, Ecuador, El Salvador, Marshall Islands, Micronesia, Palau) have completely adopted the U.S. dollar as its primary currency, and thus they have no difficulty for their own currencies on the foreign exchange markets and they have vastly reduced the risk of currency failure. On the other hand, as the dollar is one of many currencies, those dollarized countries are subject to the same vagaries of currency fluctuation as United Stateans.
Adoption of another currency – Euroization
As the euro is currently in an expansion mode, many countries are considering joining. A few small countries such as Andorra, Monaco, Montenegro, and the Vatican, have euroized.