If you have ever traveled abroad, you will
know that not all countries use the same currency, I mean basically everyone knows that. I might make my YouTube money in US Dollars,
but now that I live in Germany I spend that money in Euros, and yet despite the Euro I
won’t have to travel far to use a different currency altogether, be it Danish krone, Swedish
krona, British pounds, Polish złoty, Czech koruna, Romanian leu, Turkish lira, or whatever
else I can find myself using after a 19€ easyJet flight. Although collecting foreign currencies may
be incredibly fun, after the umpteenth time visiting a particular country, converting
to different currencies can get a little inconvenient, and also annoying to remember that paying,
for example, 10 ringgit for a Shawarma in Malaysia is actually not a complete ripoff. This is exactly why the Euro was put into
place, so what would it be like if we had a single currency, not just for half of a
particular continent, but for the whole world? So first, why do we do this to ourselves? How did this get started? Well it’s much the same reason as to why
countries have different languages, cultures, or even power outlets; basically, there was
no original global currency. What I mean by this is that the idea of a
standardized currency was an idea that had come about independently in numerous cultures
over the millennia. If you watch educational YouTube channels
as much as I do this is probably a story you’ve heard numerous times already so I’ll keep
it somewhat brief, in the beginning of human civilization people traded using a simple
bartering system, literally just trading a good you made for a good someone else made. The problem with this of course is that, if
you sell bread and I sell cows, it’s very inconvenient if I only wanted two loaves of
bread, since two loaves are not worth a whole cow-- especially considering cows back then
would have been more useful alive, which in this case the process of denomination generally
doesn’t allow for-- and of course it’s possible you just don’t want cows. In response to this fairly universal problem,
just about every complex civilization developed some sort of common material for everyone
to trade, be it metals, sea shells, emeralds, or even sheets of paper. These were better than using life forms because
of their whole non-perishability thing, but also allowed traders to actually trade with
precise amounts. So if I gave you this exact amount of gold
for this exact amount of bread, you can now be certain that said amount of gold will buy
you this exact amount of… wool, or whatever else you’re into. This was such a good idea that different cultures
all had this idea independently of one-another, and so developed different standardizations,
since there’s no intrinsic value in gold or sea shells so you can kind of use whatever’s
around that’s somewhat rare, which with a few slight tweaks pretty much brings us
to today (okay, well actually quite major tweaks, but still). This means that transactions are more or less
the norm in international trade, which can be incredibly tough to deal with, so could
we even establish a world currency to circumvent all this? Well first, there is one thing I haven’t
mentioned, something both important to understanding why some countries might be reluctant to switch
over to a global currency, and yet another annoyance to travelers everywhere: the value
of currencies fluctuate in comparison to that of other currencies, as in one day 1 US Dollar
might be worth 4.22 Malaysian Ringgit, and then the next 4.39, and then perhaps something
really bad happens in Malaysia and the value of the Ringgit completely plummets. This can actually be useful to countries which
control their own currencies in a time of financial instability, since they can either
slow down inflation to deflate their currency so their citizens have more purchasing power,
or speed it up to shrink the currency and make the country more attractive to foreign
visitors. To perhaps help us answer this question, let’s
look at the smaller examples the real world has already provided us. There are quite a few multinational currencies
out there, the most famous of these is the Euro, but many countries in central/west Africa
use the CFA franc, and many Caribbean nations use the East Caribbean dollar. Also many smaller nations share currencies
with other bigger nations, such as (not including pegged currencies) the US dollar, Australian
dollar, South African rand, Indian rupee, and many others. So how’s all that going for them? Well currency unions naturally have their
fair share of advantages and disadvantages; smaller countries (at least those that don’t
have the luck of literally being Singapore) can use a more competitive currency, exchanges
become easier, and they could help weather a financial disaster, however they generally
cannot dictate their own monetary policy, and just because one of these nations is booming
doesn’t necessarily mean the others are too. Perhaps the best example we can take for both
sides of the coin is Zimbabwe. In 2007 they famously entered a period of
hyperinflation, where the value of the Zimbabwe dollar plummeted to the point where prices
doubled every 24 hours, resulting in the Zimbabwe dollar being redenominated three times just
to remove all the extra zeroes. By the end of this, one Fourth Zimbabwe dollar
was really 10 septillion (10^25) First Zimbabwe dollars. Shortly afterward Zimbabwe started using foreign
currencies like the Euro, British pound, and especially the US dollar, which has worked
to stave off hyperinflation, but has of course not allowed the country much independence
in its finances. As Europe has had to deal with, creating a
kind of one-size-fits-all currency-- while certainly not impossible-- is still incredibly
difficult without careful financial decisions, which probably explains why even the Eurozone
has strict economic requirements for a country to enter. The Euro of course has also famously struggled
in its adolescence, it’s become a somewhat more stable currency recently, but its value
was deeply threatened by the Greek economic crisis. In contrast the US Dollar is perhaps the safest
currency in the world and by far the most widely traded of any currency, pushing the
Euro to a distant second, even though the US also had various union-related troubles
growing up (more about that in a possible future video). This is because the US can be classified as
an optimum currency area, where an area is so politically and economically linked that
it wouldn’t make sense for the states to have different currencies, like in the colonial
era. Thus the only way to truly circumvent these
economic problems would be to unite not just the currencies, but also everything else in
the world. So basically the best pros of a global currency--
aside from all the benefits for tourists and business travelers-- would be no more Zimbabwe-like
scenarios, but the downsides would include possibly more Greece-like scenarios. Also currencies couldn’t be traded for a
profit on the market so… not stonks. There‘s one more pressing question that
would need to be addressed though, especially regarding inflation and interest rates: who
would control this currency? A global currency would be a vast responsibility
for any one group to take, especially regarding finding a way for it to fit economies from
the US to Turkey to Madagascar. Overall I‘m not saying this would be a bad
idea, far from it, but whoever‘s in charge of organizing this should understandably tread
lightly. Thanks for watching and thanks to my friend
Barris from the French history channel This Is Barris for helping look over this script. Now for my weekly barrage of different things
I want you to do even though you probably won‘t, go subscribe to his channel, join
the Discord server, support the channel on Patreon, like this video, and subscribe to
KhAnubis to learn something new every Sunday.
