Moses Solemon

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Calling The (IMF): The Need for “Global Currency” is Real and Immediate ____________________________

Christine Lagarde,


Written by: Moses Solemon


There are several money notes used around the world for business and trade exchange. All current money notes, or currency, are issued by sovereign states. Their credibility and authority are derived from the fact that they are Generally Accepted Purchase and Payment (GAPP) means.

The classical definition of currency is an artificial commodity that is used as a medium of exchange and a way to lend, borrow, and store value.

Over the centuries there were other global currencies. Such as the Spanish dollar between the 17th and 19th centuries. Then the Gold Standard (between the 19th and 20th centuries.  Until today where we have the USD, Sterling Pound, Euro, Yen and the Chinese Yuan as major currencies.

The most famous is the United States Dollar ($ US) which is used to measure the value of all major commodities and of course the global trade. Almost sixty per cent of the total volume of world trade is executed using the American Dollar. This fact is due to the role played by the United States of America in ending the Second World War (1939-1945). Such role was strengthened by it’s contributions to the rebuilding of Europe through the Marshall Plan.

Following the Bretton Woods Conference of 1944, international exchange rates were pegged against the United States dollar, which could be exchanged for a fixed amount of gold. Such act made the US dollar a dominant global currency.

However, and after the Smithsonian Agreement in 1971 the fixed exchange rate regime collapsed and also the gold standard. Since then, most international currencies no longer been pegged against the United States dollar. The fact that the United States is the world’s largest and most influential economy, most international transactions continue to be conducted with the United States dollar, and it has remained the de facto world currency.

The use of the US dollar’s as a reserve currency gives the United States a dominant role in the global economy. That also means other countries are subject to U.S. fiscal and monetary policies over which they have no control. This is unfair because in 2008 when the US economy crashed the whole world followed almost immediately.

There were huge flows of capital from mature economies to emerging markets prior to 2008 that helped emerging markets grow. However, since the 2008 crisis most of the capital stayed at home. Such forced conditions have deprived emerging markets from growth opportunities. (1)

Obviously, the Euro cannot play the role of universal currency. The Euro suffers from the fragmented political structure that governs the economy it represents. Each EU member country can issue its own debt, the euro is used in 16 different bond markets. Each country sets its own tax and spending policies; some countries now carry debts larger than its gross domestic product. So while they’ve been freed of the impact of currency fluctuation, EU countries face a different impact from the whims of global investors. Borrowing costs in heavily indebted countries like Spain, Greece, Ireland and Portugal are much higher than of Germany, which has accumulated the largest pile of savings. (2)

Currencies are also valued based on trade flows; if the Japanese yen is relatively weak compared to the dollar, and American car buyers can buy a higher-end Japanese model for the same price in dollars, they will choose the Japanese car. That means that countries that are more productive generally see the value of their currency strengthen, which gives people who earn wages in that currency more buying power when they buy products priced in other, weaker currencies. (2)

That is why the Chinese proposal for a single global currency has legitimate reasoning to float the idea of replacing the dollar as the “reserve” currency. (2)

Most proponents argue that Currency consolidation seems like a desirable and likely process, but it is already important to begin thinking about where consolidation should stop. (3)

The call of a global or universal currency is not new. The concept has been suggested since the 16th century and came close to being instituted after WWII. However, did not happen until now. Most economists agree that the best body to issue, regulate and monitor such currency is the International Monetary Fund, the famously known in the short form as IMF. (2)

Surprisingly and since its inception in 1945 and its 189 members, the IMF is most active only in consulting, research, study, policy advice, and critique of world monetary issues. There was no notable pro-active role even after the global financial crisis in 2008. It is time to take a more positive stance by the IMF beginning with issuing a Generally Approved Purchase and Pay (GAPP) unit.

If the IMF will not fill this GAPP, then in this digital age pirates will promote their cyber currency. The BitCoin had been created in 2008 and since then it continued to grow. However, and because of the lack of enough global monitoring, some people used it to rob the public and blame it on “hacking”.

Now if the IMF wishes to truly fulfil its raison-d-etre in fostering global growth and international economic stability they should work on issuing universal GAPP unit. Otherwise, they will most definitely miss on preventing a major coming collapse like they historically did in 2008.

What are the virtues of issuing a common global money note as generally accepted purchase and pay unit? Few of such benefits are as the following:

  1. Reduce the risk of global economic failure:

With one global currency then if one big country has a crisis none is dependent on its currency (such as potentially the US or China) then other nations are not directly hit nor devastated.

  1. Facilitate standardization of sovereign currency exchange:

The reference to one independent globally issued and regulated money-note as a currency will establish a more accurate reference line for all sovereign currencies.

  1. Enhance World Trade Integration of Fair Basis:

Adopting one global currency will encourage people to trade more on fair basis without fearing much of the trade deficit and surplus as all nations get enough of the per capita income and can exchange that with goods and services on a worldwide basis.

  1. Create Better Economic Conditions in Distressed Nations:

Distressed nations will no longer have to strive with enough reserve of currencies for other nations such as Greece with Euro or Mexico with the US dollar. Hence, such countries will have a second chance to prosper and grow.

  1. Reduce The Risk of Over Valuation of Assets and Commodities:

As one currency prevails, there will be a fair opportunity for all commodities, assets, product, and services to be fairly valued on an accurate reference. Therefore, ensuring fair trade for all nations.

  1. Regulate the flow of money:

Having one GAPP unit and under one global and international authority will enable better flow and improved circulation of capital around the world. Thus providing the opportunity for the less fortunate to have better living conditions.

  1. Measurement Money Flow More Accurately and Easier:

The measurement of the wealth of nations, GDP, assets, the value of bonds, etc will be a much easier and less debatable exercise for all economist and world countries and authorities. Because there will be “one measure and one standard” to measure all.

  1. Protection of Democracy and Social Justice:

In the years prior and following the global financial crisis of 2008,  the middle class was pressed severely.  And now this middle class is vanishing rapidly around the world.  As such a phenomenon is happening, severe injustice this leading to rising levels of the social riot in the form of street protest, violence, and racial tension.  Democracy and the social contract are being damaged by the brutality of abused fundamentals capitalism and misused principles of the market economy. The IMF will save the eroding democratic states in modern civilization.

All of such factors are legitimate and important.  Mrs Christine Lagarde the IMF head is probably the strongest lady that can do this job.  And I am calling her to act on this issue today and now.

International Monetary Fund (IMF) Managing Director Christine Lagarde speaks during a news conference at World Bank Group-International Monetary Fund Spring Meetings in Washington, Saturday, April 12, 2014. ( AP Photo/Jose Luis Magana)

Christine, it is not enough for us to condemn the darkness when we have the matches to light the candles.



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