"Visions of World Benefit & Global Responsibility: Perspectives of McGill Students

Thursday, July 26, 2007

Economic Globalization and a Global Currency

One of the trends of globalization is the increased economic interdependence between nations. Our world is moving towards increased financial contact such as goods, capital, and labour. The EU is a perfect example of economic globalization in a regional level, enjoying the benefits of free trade and a single currency.

The current situation is that the world is moving towards economic globalization, but there still remain the barriers imposed by many countries themselves. Traditionally, countries have implemented free trade barriers to protect the financial stability of its citizens. For example, there is a tariff (or tax) in Malaysia on imported cars to protect the local car industry. A country could also implement a quota on another importer, that is to restrict the amount of imports. The lack of a common currency to trade in is another significant barrier to free trade. Different countries have different standards of living, so the volatility of a country's economy affects its currency. If a country's currency is not stable, it will discourage its trading partners to invest in its currency. This is where a global currency will come in useful.

A global currency here is defined as intra-national and international transactions carried out in one single currency. There are many ways to implement this: by the establishment of a global central bank, or by consensus from a select partnership of key nations that currently dominate the international economy. A preexisting currency is the digital gold currency, which is a form of electronic money denominated in the weight of gold. The benefit from this idea is that most of the currently existing barriers to free trade will be eliminated, thus promoting economic globalization.

The removal of global trade barriers will allow countries to benefit from economies of scale through comparative advantage. This is when, in an ideal situation, each country specializes to what it has a significant advantage in production over other nations, and trade without restrictions, creating a necessary web of interdependency. Thus companies will have the cheapest raw materials and labour and consumers will benefit from goods that are competitively priced.

While we are not at the stage of complete economic globalization, its progress remains promising. Trade barriers are slowly being broken down by the same governments that once imposed them, and free trade agreements are becoming more and more frequent, like NAFTA, AFTA, and the Eurozone. One day, it may be possible for any company to market its goods to the entire world without restrictions.


"Digital Gold." Wikipedia.

"The Global Economy." Wikipedia.

"World Currency." Wikipedia.

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