Naked Science Forum
Non Life Sciences => Technology => Topic started by: Sally Le Page on 24/06/2021 14:46:30
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Nicholas asked us:
"Why can’t the whole world use the same currency? Why should the currency of some countries be more valuable than others?"
Do you know?
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Politics. The reason (along with religion, with which it is closely allied) for practically everything that is wrong with the world.
If you draw any arbitrary line around any set of people, they tend to form a group, and gradually those with no actual ability or merit become "leaders". To retain their exalted position and salary they have to declare that others outside the arbitrary boundary are in some way hostile and unworthy, so cannot use the same currency. Then those with even less merit or ability make money by betting on the future value of one currency against another, and end up earning more money than honest citizens with proper jobs.
Sadly, although violent revolution changes many things, and often for the better, it usually results in the emergence of yet another currency.
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If you have your own currency, you can decide how much of it to print and, to a degree, control not only the value of the currency, but also you can choose where to spend it.
For example, you could "print" money and spend it on schools, or you could let the banks print money- they call it "quantitative easing" and then use that as an excuse for propping up the finance industry on the basis that it must be important because it makes big profits.
This guarantees that the workers in that industry vote for you.
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Just in case anyone thinks that the British Isles might be a place where a single stable currency would make sense
bawbee: a former silver coin worth three (later six) Scottish pennies.
The groat is the traditional name of a defunct English and Irish silver coin worth four pence, and also a Scottish coin which was originally worth fourpence, with later issues being valued at eightpence and one shilling.
guinea:the sum of £1.05 (21 shillings in predecimal currency), now used mainly for determining professional fees and auction prices.
florin: a former British coin and monetary unit worth two shillings.
And I have no idea how trade was conducted in the Irish Republic for three years
The Irish pound [punt - sort of but not always quite comparable with the sterling pound] was replaced by the euro on 1 January 1999. Euro currency did not begin circulation until the beginning of 2002.
Far be it from me to complain about currency speculators. On 15 September 1992 I set off to work in Dublin with UK£200 worth of IR£ in cash. As it happened I only used a credit card during the trip. Returning late the next day I discovered that "the punt in my pocket" was now worth 5% more than I had paid for it. All due to the economic brilliance of a Conservative government led by an ex-banker.
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Just in case anyone thinks that the British Isles might be a place where a single stable currency would make sense
It was stable.
There were 240 pennies in a pound.
That system was in place for so long that some of the coins acquired names of their own- you missed the tanner,by the way.
That system had been in place for a roughly 1200 years.
Then in 1971 someone decided it was easier to change to a system where the pound was divided into 100 "New" pennies.
The pound stayed the same.
That's fairly stable.
Except that a pound today has the buying power of about 7 pence at 1971 prices.
https://en.wikipedia.org/wiki/Pound_sterling#Value
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1) History. Each country has its own currency, and likes the control. To join the EU, national banks have to give up a lot of autonomy.
2) Economics: When each of the countries in Europe had their own culture, weather, presidents, policies, laws and legal system, some counties did better in some years than other countries; this was reflected in the exchange rates between their currencies.
Within the EU, you have partial harmonisation of laws, but to a large extent countries retain their own language, culture, weather, presidents, policies and legal system; but some countries will still do better in some years than other countries.
But then the European currencies were locked together at a fixed exchange rate (around the year 2000) and subsequently became a single currency, the Euro. Exchange rates can no longer reflect differences between countries, so it must be reflected in other ways like wages, pensions, health care quality, etc.
Probably the best example of this economic lockstep is the reunification of Germany, after the fall of the Berlin Wall.
- The new combined German government declared a fixed exchange rate between the two sides
- This produced many kinds of inequities and provoked some bizarre behavior
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It was stable.
There were 240 pennies in a pound.
That figure remained, to the utter mystification of Johnny Foreigner*, for a very long time. But the examples I quoted showed how a single coin like a bawbee could be worth 3 or 6 Scottish pennies and a groat 4, 8 or 12 pennies, with some variance (or total non-acceptance) south of the border.
I don't recall Scottish pennies but Irish coins were in wide circulation at face value in the UK (and vice versa) in my youth, long after independence and only disappeared when the UK coins were redesigned.
*I think I paid 12 shillings and six pence for a stone of fish at some point, completely baffling my French friend. Not that he could make much sense of the West Highland accent anyway.
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Because each country wants to have control of their currency.
Also just because everyone used the same currency wouldn't magically make a poor country not poor. A poor country would still have less money than a rich one.
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Durability. ...
Portability. ...
Divisibility. ...
Uniformity. ...
Limited supply. ...
Acceptability.
Hopefully we might see a universally acceptable digital credits system in the future.
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Far far away Future.