Development and the colour of money : should developing countries have their own currency?
In just about a year from now you will have to replace your Dutch guilders for euros. You mayor may not have asked yourself the question: will this be good for me and for the economy? With the decline of its rate against the dollar you may have started to think that this euro business is not such a good idea after all. If you are concerned about this, let me disappoint you up front. I am not going to discuss with you the possible bright and dark spots of a declining euro/dollar rate. Something I will address though, is whether the introduction of the euro could be part of a global process towards fewer currencies. Why should some 185-odd countries all be printing their own money? We are moving towards a world with two soft drink companies, two major aeroplane manufacturers, three toothpaste producers and an increasing concentration of international banking and insurance companies. So why have all those different bank notes? Shouldn't we better move towards a world with only a few currency zones? And now that we are reducing numbers, why not have just have one single world currency, as recently proposed by 1999 Nobel Prize winner Robert Mundell (2000)? Such an idea might encounter serious political obstacles at the moment, but it could be overtaken by events. The Internet has adopted the dollar as its de facto trading currency. With the lilcely rapid expansion of Internet sales, maybe countries should start anticipating an evolution towards a single world currency? Would the world and, more in particular, developing countries gain from such a system?
|Keywords||currencies, exchange rate, international monetary system|
|Publisher||Erasmus University Rotterdam|
|Note||Inaugural address as professor of finance and development delivered on 7 December 2000 at The Institute of Social Studies, The Hague, The Netherlands|
Vos, R.. (2000, December 7). Development and the colour of money : should developing countries have their own currency?. Erasmus University Rotterdam. Retrieved from http://hdl.handle.net/1765/30875