The Benefits of a Common Digital Currency Globally The world today is more economically and financially integrated than at any other time since the second half of the nineteenth century. But policymaking - especially the actions of central banks - remains anachronistically national and regional, writes Alexander Friedman, executive director of the asset management holding GAM, on the Project Syndicate portal. "Is not the time to rethink the global monetary system? In particular, would a single global central bank and a global currency have no more meaning than our confused, inefficient and outdated assemblage of monetary policies and national currencies?" expert. "Leaving the gold standard seemed equally implausible" According to Friedman, current technology "is getting to the point where a common digital currency, which would be possible thanks to the adoption of almost universal cellular telephony, certainly makes this possible." "And as crazy as the idea may sound, let us remember that before the First World War, abandoning the gold standard seemed equally implausible," he says. "The different currencies are not only a nuisance for tourists returning home with their pockets full of unusable foreign currencies," he said. "Global companies are wasting time and money. resources in efforts basically useless to guard against monetary risk (benefiting only banks acting as intermediaries). What would be the benefits of a global currency? "The benefits of liberating the world from national currencies would be enormous," says the executive director. According to him, "at a stroke" would disappear the "risk of monetary wars and the damage they can inflict on the world economy would be eliminated." In addition, pricing would be "more transparent" and consumers could "detect anomalies (from their mobile phones)" and "shop at the best prices." "By eliminating foreign currency transactions and hedging costs, a single currency would revitalize stalled world trade and improve the efficiency of global capital allocation," Friedman adds, noting that "globalization has shrunk the size of the global economy ", so the time has come for" a world central bank. "
Dreaming costs nothing: "a single currency is unattainable" However, in spite of the aforementioned benefits, Friedman recognizes that in our current international monetary system "a single world currency is in fact neither probable nor desirable." One reason the executive director says is that central banks, while ideally independent of political influence, "are still accountable to the body politic." "At the supranational level, legitimacy remains highly questionable, as the experience of the eurozone far exceeds," he criticizes. The expert also points out that the decisions that central banks must make are "technocratic and political at the same time". "The legitimacy of them is rooted in the law, which in itself is the expression of the democratic will." To bail out one bank and not another, to buy sovereign debt but not state debt or an autonomous territory? these issues at the supranational level are not theoretically impossible, they are absolutely unworkable in the modern era, "says Friedman, adding that" legitimacy, not technology, is the currency of the central banks. " The expert states that in any case "the perfect - a single central bank and a single currency, both unattainable - should not be an enemy of the good" and that "within the framework of our existing means, it is certainly possible to improve our policy tools and drive growth and prosperity globally."