In today’s video, we’re going to
discuss what would happen if all of us agreed to use the same
currency across the world… The concept of money has been
around for a long time. So long that it’s hard for us
to imagine life without it. But if you go back in time by 5000 years,
you’ll see humans living in a society where money didn’t exist and going
about their lives just fine. Back then, instead of spending
money to buy something, people just borrowed items from
each other based on mutual trust (which later came to be known as debt). Sometimes, they exchanged items of the same
value to get what they wanted (which was otherwise called bartering). These were simple methods and
worked reasonably well for a while. But both of them had their fair
share of issues too. With debt, you could only borrow from someone
who already trusted you. And on the other hand, while bartering,
you had to find someone who was interested in what you had to exchange. This restricted the number of people
you could trade with and quickly became a problem for everyone. So we found a solution by coming up
with the idea of currency, a universal good that could be exchanged for anything. With a common currency in place, people were
able to trade with pretty much anyone easily. Since currency was usually made
out of paper or metal, it didn’t spoil like food, or grow older like cattle. People could keep them for as long as they wanted. It was also small, lightweight and practical
enough to be carried around easily, even in large amounts. This was a revolutionary idea,
and it paved the way for us to work together and build better societies. Everything was perfect and everyone
lived happily ever after. Except… it wasn’t and they did not. It turned out, everybody had their own ideas
for money around the world. Some of us used gold and silver coins,
others used paper notes, and some of us even used cowrie shells. Every civilization around the world came up
with their own currency, and it became hard for people to trade between regions. Pretty soon, we were forced to come up with
a system to help us exchange different kinds of money. Fast forward to today, thousands of years
later, this system for converting currency still exists in some form and is called
foreign exchange (or forex). While the underlying need for currency has
stayed the same, everything else in the world has changed completely. Today, there are more than 180 currencies
in circulation around the world, created and managed by different countries. We exchange more than 4.1 trillion dollars
worth of money every day. Currency trading is considered to be “the
largest market in the world”. But wait, what if we could make
things simple again and remove the concept of
currency exchange altogether? Let us take a closer look at
a single currency system. One of the biggest benefits of moving to a
single currency is that we will no longer need foreign exchange. According to a report published by the
Single Global Currency Association, this would save us more than $400 billion
in just transaction fees every year. All of that money saved can be used for development or can even help governments
provide tax cuts to people. No matter how people choose to spend their money, they will not have to go through
a mediator at any point. This would make it very easy for them
to compare prices globally and buy foreign goods every Additionally, companies will be able to sell
their products across international markets easily, which will not only increase competition
but also lower prices, ultimately making things better for the consumer. When a single global currency is implemented,
there will be no multi-currency fluctuations and the value of money will stay the same
across the world, similar to how it is today between two European nations
or two cities in the United States. Since this new form of currency will not be associated
with the economy of one particular country, there will be no risk associated with holding it. The value of your money will stay the same
in the global market even when your country is going through a tough time. This will mean that individuals,
companies and even banks will no longer have to worry about their investments, especially during unexpected events like wars, depressions and natural disasters. With any additional costs and complexities
out of the way, businesses will start making more foreign investments and will create more
opportunities together. This is expected to increase the overall GDP
of the world by $9 trillion and can tremendously improve standards of
living in developing countries. All of these make it look like having a universal
currency is a great idea. So why don’t we go ahead and do it? Well, hold on a second… These are all hypothetical scenarios and we
don’t know what challenges we’ll discover if we try to do this in real-life. But let’s try to make an educated guess. For starters, moving to a single currency
system will cause a lot of confusion and make people lose their sense of wealth. For example, if a single currency gets implemented,
imagine the life of people living in Vietnam where 1 US Dollar is worth
over 22,000 Vietnamese Dong. Some of them could go from being a billionaire
to a millionaire overnight and feel like they lost most of their wealth, even if they continue to have the same value of money. Not only that, adopting a single currency
for the whole world means that we’ll have to agree on a one-size-fits-all monetary policy
(similar to what we have with the Euro today). While it has its benefits, it will offer no
flexibility to independent nations and make it harder for them to deal with their
own unique economic problems. For example, because they weren’t using
a common currency, Iceland was able to manage their economic crisis better by deprecating
the value of the Krona. However, even though Greece probably needs
to do something similar, an adjustment (if it can happen at all) will take years because they’ve agreed to use the Euro. Meanwhile, other wealthier nations in Europe,
like Germany, for example, will have to shoulder the economic impact of countries like Greece, Spain and Portugal who are facing their own economic challenges. These sort of problems are already starting
to show up in real-life with the euro, a currency that was adopted by just
19 countries in the same region. Imagine how hard it would be for us to achieve
this with hundreds of countries from different parts of the world facing very different challenges. More than anything else, the hardest part
of adopting a universal currency is setting up a centralized union to regulate it. In addition to the almost impossible task
of deciding who would be in charge, we’ll need all of our leaders to let go
of some of their power in order for the greater good of the entire world. They will also need to agree on sound financial
policies that work for everyone, and not just for themselves. While all of this might seem unlikely,
it’s not impossible. The world has already seen drastic changes
made to foreign exchange in recent history. With the introduction of floating currencies
in 1971 and the Euro in 1999, our leaders have shown that they are ready to try bold
ideas to make life better for everyone. So even if we don’t move to
a single currency right away, there’s a good chance that we will
take a few steps in that direction. With some countries, including Russia and
China, as well as the United Nations expressing interest, it might not be long before we get started. Only time will tell if we’ll be able to
do any of this successfully and have a positive effect on our society. If you enjoyed watching this video, please
show us some support by hitting the like button and subscribing to our channel. To learn more about this topic, check out
some of these videos that offer some great insights on currency exchange. You can also check out our recent video
on climate change which talks about why we should
come together to save our planet. Thanks for watching and see you in the next one!