The governor of China's central bank has written a proposal for the creation of a global currency, one single monetary unit that could be used to buy and sell worldwide. While a single world currency might be far-fetched right now, China's efforts to promote it at the G-20 summit might get the idea moved from the refrigerator to the back burner.
Governor Zhou Xiaochuan of China's central bank has suggested that the world's financial situation would be improved by moving toward a "super-sovereign reserve currency." While most countries find the proposal a bit radical, Russia, India, and Brazil have already spoken in support of the idea. Even US Treasury Secretary Tim Geithner said the US was "open" to the suggestion - though he acknowledged he not yet read Zhou's paper.
The primary purpose of the proposal is to get away from using the US Dollar as the world's reserve currency. Instead, China wants to implement a global currency, backed by 30 commodities after the model John Maynard Keynes proposed in the 1940s. Russia wants a currency backed by the Gold Standard, but using 30 commodities as an anchor would give the new currency a broader base than the Gold Standard. Zhou writes:
"The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies."
Still, if certain commodities become more rare (and therefore expensive), the currency might not be as stable as Zhou and his allies would like.
Zhou recognizes that this reserve currency would take a long time to be accepted and implemented world-wide, so he suggests using Special Drawing Rights (SDRs) issued by the International Monetary Fund as a start. He envisions the IMF as the global bank in charge of the currency.
Ultimately, the "super-sovereign reserve currency" under the IMF would mean the end to national economic sovereignty. Zhou writes;
"With its universal membership, its unique mandate of maintaining monetary and financial stability, and as an international ‘supervisor' on the macroeconomic policies of its member countries, the IMF, equipped with its expertise, is endowed with a natural advantage to act as the manager of its member countries' reserves." [Emphasis added.]
A super-sovereign reserve currency is indeed a long ways away, and promises to be a major headache for member countries. The European Central Bank struggles to handle policy for its 16 member nations. A central bank managing the economies of the entire world would prove a bureaucratic nightmare. Plus, it would be difficult, if not impossible, to find truly neutral parties to run the exceedingly powerful IMF at that point.
Yet, the creation of regional currencies has become increasingly popular. The European Union is not alone. Five of the six Islamic states constituting the Gulf Cooperation Council have agreed to shoot for a unified currency by 2010. In early March, African economists and academics met in Nairobi to push toward a single African currency. It may not be long before a global currency seems possible and even desirable to a significantly larger portion of the globe.
Revelation 13 speaks of a time when all the economies of the world are tied together so that the Coming World Leader is able to require every human on earth to receive a mark in order to buy or sell. These are interesting times in which we live.
