It has been proposed that global currency replacing all currencies should be introduced. What are the advantages
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advantages -
Elimination of the costs of converting currencies - converting between currencies has a cost for individuals and firms. A single currency will remove these costs.Increased price transparency - prices in different currencies can be difficult to compare. How often do you travel around with a calculator, to check the price of something in another country? If everything is in the same currency, price comparison is straightforward. This may help firms cut costs, as they will be able to find the cheapest product more easily.Increased competition and efficiency - a single currency should encourage greater competition as there is greater transparency in prices. This should help increase efficiency as firms are forced to remain competitive.Increased inward investment - the single market in Europe has in excess of 200 million consumers and after enlargement in 2004 has in excess of 300 million. The Euro is one of the most significant world currencies. Both these things add up to the possibility of increased inward investment from the rest of the world into Europe.Elimination of exchange rate uncertainty - one of the problems with trading with other countries is that you never know which way the exchange rate will move. It may move in your favour, but it could equally move against you and end up costing you a lot more. This sort of uncertainty can hinder trade - particularly for smaller firms. A single currency gets rid of all this uncertainty within the single currency zone, and should encourage trade (within the zone
Elimination of the costs of converting currencies - converting between currencies has a cost for individuals and firms. A single currency will remove these costs.Increased price transparency - prices in different currencies can be difficult to compare. How often do you travel around with a calculator, to check the price of something in another country? If everything is in the same currency, price comparison is straightforward. This may help firms cut costs, as they will be able to find the cheapest product more easily.Increased competition and efficiency - a single currency should encourage greater competition as there is greater transparency in prices. This should help increase efficiency as firms are forced to remain competitive.Increased inward investment - the single market in Europe has in excess of 200 million consumers and after enlargement in 2004 has in excess of 300 million. The Euro is one of the most significant world currencies. Both these things add up to the possibility of increased inward investment from the rest of the world into Europe.Elimination of exchange rate uncertainty - one of the problems with trading with other countries is that you never know which way the exchange rate will move. It may move in your favour, but it could equally move against you and end up costing you a lot more. This sort of uncertainty can hinder trade - particularly for smaller firms. A single currency gets rid of all this uncertainty within the single currency zone, and should encourage trade (within the zone
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The most important advantage of global currency replacing all currencies would be that it would remove all confusion in regards money used for global trading between different countries.
Explanation:
- The important benefit of a global currency is that it would remove the problem of spending money in other countries. It would also remove the problem of different currencies in international trading of goods.
- The single currency in all the countries would help in free flow of goods between the countries. It will also lead to an increase in international transactions and trading
- The single currency would remove all kinds of monetary changes which the countries implement to gain advantage in regards to devaluing their currencies for decreasing the prices of their goods. This problem would be eradicated with a global currency replacing all currencies.
To know more about global currency
Which currency is normally used for conducting global trade between two countries? A. currency of the seller B. currency of the buyer C. currency of a third country D. currency of the stronger country
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