Unify Currency Transcript For Free

Will There Be a Single World Currency? While the U.S. dollar is often seen as the de facto world currency, to have one truly global currency would require a level of comparability between countries which does not currently exist and isn't likely to for some time to come.

Since the end of World War II, the dollar has been the world's most important means of exchange. It is the most commonly held reserve currency and the most widely used currency for international trade and other transactions around the world.

For the U.S., it would likely mean less access to capital, higher borrowing costs and lower stock market values, among other effects. Having the world's reserve currency has allowed the U.S. to run large deficits in terms of both international trade and government spending.

But that begs a critical question: What would replace the dollar? Some say it will be the euro; others, perhaps the Japanese yen or China's renminbi. And some call for a new world reserve currency, possibly based on the IMF's Special Drawing Right or SDR, a reserve asset.

An exchange rate is the rate at which one currency may be converted into another, also called rate of exchange of foreign exchange rate or currency exchange rate.

How much demand there is in relation to the supply of a currency will determine that currency's value in relation to another currency. For example, if the demand for U.S. dollars by Europeans increases, the supply-demand relationship will cause an increase in the price of the U.S. dollar in relation to the euro.

In the past year, however, China has stepped up its efforts to settle trade with other countries in CNY. "It is highly unlikely that the US dollar-dominated global reserve system will break and another currency will take the place of the US dollar."

The United States dollar has been the world's primary reserve currency for over 60 years. Under the Bretton Woods system, the dollar was pegged to gold and most other currencies were pegged to the dollar. As a result of this arrangement, dollars were used as the main intervention currency and, hence, reserve currency.