IS THERE A NEED FOR A GLOBAL CURRENCY?

IS THERE A NEED FOR A GLOBAL CURRENCY?

                               Dr. Napoleon POP and Dr. Valeriu IOAN-FRANC

                                                 “We cannot solve our problems with the same thinking
                                                                    we used when we have created them”
                                                                                          Albert Einstein

Abstract: The world is in a balance of threats, the last crisis making us more conscious that the
things cannot continue like this. Is not only about economics, but it prevails just because we are to
mach linked with this, our day by day life being dependent on our material comfort which, normally,
is brought mainly by what we earn from our work, capital, deposits, shares, equities etc. The roots of
the last financial crisis seem to be grown before August 2007 and we discover, with the time passing,
that they are a matter of human behaviour, a problem of moral capital, even a question how democracy
is evolving. So, we reach the cradle of fundamental values which are common to the economic,
political and social life. Are to day threats induced by a certain deviation from all of these values? If it
is the right answer, then we need a new reference point to these values, just because our life is
complicated by the challenges of globalisation. Paul Volcker, former FED president, said that the
globalisation needs a global currency. We, the authors, have wanted to understand the meaning of this
call. That is why we started with three questions, being sure that the answers are not so easy to be
found: Do we live a time which could stimulate the thinking for a new currency? What did we learn
out of the global financial system and its crisis? Can the euro governance be a model for a global
currency? In any respect, if we think about a global currency, it can be seen only as priority global
political project, calling for strong political will and satisfying the interests of all global actors.
Key words: crisis, values, human behaviour, global threats, global currency, global order.

For more than five years we are dealing with the solutions only to the
effects of the present financial crises, the success in the implementation
of the decided measures taken by individual country or/and by
international community being still awaited. It is possible that our
sorrows or defeat to be explained at least by two facts. First, probably we
did not yet understand the concept of the globalisation and its real
functioning, as the financial crisis has brought important prejudice to the
general progress exactly through the channels of the globalisation:
emergency, international financial integration and competition. The
second fact: the financial crisis raised two apparent irreducible
challenges for the decision makers, the choice between the state of

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urgency and the need for a vision, no one of these challenges being well
managed.
As to the causes, there is still a long way to tackle with them seriously,
as any recovery from many other previous crises either pushed us to
forget about them or impeded us to deal correctly with them. Probably
that is why Alessandro Leipold, chief economist with Lisbon Council,
the later a think tank located in Bruxelles, when he asked himself why the
crisis persists when a lot have been done, he has opened a new chapter in
economic research called “a good crisis go to waste”. Indeed, the
question remains. Are we learning something out of wrong doings
before and during the last financial crisis?
Time is passing by and it appears, now, that even if we admit to learn
some lessons in the traditional way the economists have done in so far,
to apply them in the foreseeable future appears to be too late and more
inappropriate, as the world has changed dramatically and the response
to the mending measures is sometime even astonishing.
Anyhow, we are lucky because Leipold has done a second invitation
addressed not only to the economists, but also too many other
professions, “to think unthinkable”. So, encouraged by these two
invitations, we dared to take up the subject of the global currency, not
necessarily as new theme, because it is not, but as a new approach to
seize the benefits of the globalization.
In our opinion, the answer can not any more be placed only in the area
of the traditional policies we where accustomed to conduct, as their
powers and results in an optimal time seemed to be overestimated. Let
us remember, at least, the adverse and dangerous social impact of the
austerity programmes promoted in Europe, out of which somebody can
extract one illuminating conclusion: under the ashes of the financial crisis
there is a prolonged crisis of values at the level of the humane capital,
mainly in human behaviour, a matter of longer societal evolution under
a lot of factors less observed and less taken into account when the
economy usually is heating is up and we believe that a new crisis is far
away, if not impossible.
We are talking about the spur in the human greediness, feeding the
fading out of trust in authentic moral values, a down sliding in the

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correctness of political will of the politicians, leaving important regional
and global projects without strong leaders, and a speedy loose in the
compliance with democracy principles, at a time when through
globalization its values are supposed to conquer the entire world.
What might be behind the fact that between 1970 and 2012, a laps of
time beginning with the dismantling of the international monetary
system by US decisions to abolish the fixed gold price convertibility of
the US dollar, we have been confronted with 150 banking crisis, 72
sovereign debt crisis and 208 currency crisis, according to the IMF
figures? Or, how we can explain the incredible gap between the real
economy valued at $70.000 billions and the financial economy valued at
$1.000.000 billions, not talking about the main political and economic
actors` behaviour in what we call the extensive world economy?
It is the high time to place our hope in thinking the unthinkable and to
give credit to what Albert Einstein has said a long time before: “We
cannot solve our problems with the same thinking we used when we have
created them”. Why do we have to give credit to such an approach now?
An answer might be because even we, or many of us, believe that if we
continue the same way, we are paving the way for a new and, probably,
a more profound crisis than the one we are going trough now.
Since The Great Depression, the economic science progressed a lot, but
the analysis of the 29`s crisis is not yet over. After 80 years of improved
economic research, with the help of the most advanced mathematical
instruments, what we see is that a new and more extensive crisis was
possible and to deal with it was the most costly economic effort ever
done by the international community. For US economy, according to
recent figures released by FED, Dallas branch, the cost of the financial
crisis were estimated somewhere between $6.000 billions and $14.000
billions. The global loses are those of third World War!
It became obvious that we cannot judge any more a crisis only with the
help of the economic science, as the human behaviour cannot be put in a
precise theoretical pattern. If we really want to teach out something
good from the last financial crisis, we need complex researches done
with instruments of many other sciences: history, psychology, sociology,
theology, philosophy, medicine etc.

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There are moments in the mankind history when the feeling for a change
comes to be shift from mere perception to a necessity. Being confronted
with the last financial crises, still going on probably for many years from
now, and looking to its deep carved effects both in our societal system
and our mentality, more people are talking about the necessity that a
change should occur, either we refer to policies dogma, economic life
paradigm, or to the world order.
Between order and disorder, what we are more appeased by and
discussing now is about disorder’s features in the existing international
order. They are generated and left by the crisis and put into high light by
it. So, the first task is to deal mainly with re-establishing the order. If it is
true, the question is if it can be done by mending the existing order or
we need to transit to another one?
In economic language, a disorder should be dealt with the help of
policies, measures and actions providing a “soft landing”, which means
an “orderly” process to calm down the environment dominated by
turbulences.
An economic disorder is equivalent with uncontrolled turbulences, in
which we recognize an accumulation of a many destabilizing factors,
impeding the system to be sustainable managed, as its actors are loosing
the trust both in the system and among themselves. The existing
volatility on all markets and the general feeling of lack of trust are a
natural reaction to the vanished predictability and stability, and, of
course, to the dominating greediness.
The trust we usually invest in somebody or in something is a feature
built in only in the human being. There cannot be trust between two
things! Market feelings or investors` perceptions mean only human
implication. The feeling of trust has become a very volatile value, being
in fact an emotional stance, just because it is in our human nature to be
in search for a more stable reference point, today yet very difficult to be
identified. This is in short what the latest financial crisis strongly
revealed, in fact an image of a great disorder, with an unfixed compass,
on an unknown road.
What appears to be worst is the fact that the traditional mending solutions,
inefficient to the scope to which they were meant, continue to be

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promoted only as mere incremental improvements of the different parts
of the broken system, without the vision of resetting it as a whole. The
incremental improvements are not referring any more just to a normal
financial crisis. It is about a systemic and societal crisis.
The global economic recovery is fragile and uncertain even if it is seen
by many as a good omen. The usually latest IMF prognosis (July, 2013)
for the global economic growth have been negatively amended with the
warning that structural reforms are lagging behind and keeping alive
the well known classical troubles: fear of inflation, asset value
depreciation, high unemployment and new bubbles. The economic
recovery was left, more or less, only in the hands of the central banks`
non-standard instruments and their disengagement is producing new
troubles. More recently, the Ben Bernanke’s announcement to tapering
its quantitative easing monetary policy was generating more volatility in
the markets, emerging ones being brought, probably, at the centre of
new turmoil. The effectiveness of the committed “forward guidance” in
uncharted waters could lead us to another financial crisis.
All these, together with the chronic disorder’s features existing even
before the crisis, proves that the challenge to mitigate between urgency
and a visionary approach has to come to a solution where we have
openly recognize that only the economics is not any more sufficient.
More, in our opinion, the time of so called infallibility of our economic
knowledge is almost over, seeing that the outcomes of mending
measures are far away of our expectations and, some times, they real
effects even are frightening us.
We agree with the opinion that we have reached the limit of our
cognitive knowledge, persisting in some “obsessions” (Rebecca D.
Costa) on the nature of economic policies and their implementation, at a
time when the real economy either calls for something else or is not
properly reacting. There is high need to defeat the encountered trap, by
paying more attention to the mending of the distorted human behaviour
and to what type of values is actually responding.
We are also sharing the opinion that it is important to start with
something more strongly in terms of faith, truth and trust. In our quality
as economists we think that is better not to stalk on maintaining false

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illusions. The economics is not the only science inducing progress in all
areas; the economic compensation argument should not remain the only
”ladder” on which a politician should climb up to the highest
responsibilities, but not having the necessary competence; the solutions
provided only by economics cannot hill the society as a whole.
The last financial crisis can be one of the kinds of many others, but its
impact force on all life domains, due to the limited nature of the
solutions, has touched the core knots of the societal system. To conclude
at this point, the last crisis, in many respects always compared with The
Great Depression, has to be managed as a systemic one, enhancing all
the societal relations, in the new environment created by a globalisation
properly understood.
In this respect, we dare to suggest that we have to work for a new trinity
e.g. human spirit, its physical body and nature. It is a new enhanced
level above the old narrow trinity we lived in so far, consisting in norms
(regulations), economy and scare resources, the policies applied at the
latter level being proved to be less and less efficient.
At present, the beginning for a new debate on the global currency
should not be linked with a desire to define it, to explain how it can be
accomplished technically, to treat it in an academic comprehensive
fashion or to work out a handbook of theory and practice. Nor we want
to discuss the matter of a possible global currency in terms of a single
global currency in a space of a deep economic integration under the rules
of signed treaties, as the globalisation is something else.
What we want is to convince that approaching the problem of a global
currency could be a priority political project of our time. Next step is to
establish if we want a global currency or a new global monetary
standard, after gold, dollar and paper ones. In connection with that,
globalisation still needs to be defined. In globalisation, all the countries
are naturally, if not voluntarily, caught in a world concert where you have
to cooperate if you want to survive. That is the true meaning of turning
into account the challenges of the globalisation into the opportunities we
are talking so much about.
We look to a global currency as a need for a new reference point at a
time when all the others hard currency is no more capable to keep alive

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a fiction in function (Kiritescu) for all, at the global level, e.g. money as a
mean of exchange in first place. The new reference point should be a
new long lasting stage for human trust in a new treasured value. It can
be the result of a hard work mainly in the field of global cooperation, not
the product of mere statements of some personalities to which markets`
actors are listening only for short time.
The idea of the global currency post present financial crisis is linked
strongly with the necessity to achieve a progress in our cognitive level,
an approach extending the economic view of the world to the entire
framework of relations featuring a global society, having in centre not
only the management of the scare resources and increasing number of
risks, but the human being needs. It is the motive why the technical
solutions offered by the economic science are no more enough for the
foundation of a possible future global currency.
We have to move from the economics to political economy and further
to the geopolitical and international relations where we identify a great
deal of economic interests. Such an approach is also historically
imposed, if we take into account that the money, the issuers of the
money and the monetary policies can explain, at least from XV century,
even before the settlement of Bank of England, the most significant
changes in the world geopolitics.
In fact, the global destabilization has multifaceted dimensions. The
economic side of the global stance is only the tip of a huge iceberg
comprehending decades of sliding away from sound economic policies,
in general and away from real human behaviour values, especially. If
democracy is built on strong philosophical values to serve the life of
humans and not the inert things around them, morality and ethics being
part of their conduct, how we can explain that more democracy helped
by globalisation brings less respect for its own values, hurting the
purpose of its foundations?
We like to say that the economic and political stance at one point in
history is a mirror of how the people cooperate at all levels of decisions
and express their solidarity and cohesion. On top, we like to see the
political will which is the drive of achieving any project, nationally and
internationally. The financial crisis is questioning all of these, as we see a

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significant gap between believes and actions, feeding new economic
nationalism and selfishness, feelings that have nothing to do with the
way of taping the opportunities opened by a global world. We see also
too much scepticism in projects meant to bring people to work together.
If the political will in democracy is serving only to grip on power, for
sure we have a problem with its understanding and, worst, if the
continuation of the globalization process and what we expect from here
is limited only to the managing scare resources and threats, then we
continue to push away the contribution of brilliant and self evolving
capital of this world, e.g. the humane being: spirit and soul, brain and
hands.
To pay attention to the international monetary system and to the global
financial system should be a priority of our times, as almost all relations
between humans are finally governed by a contract: between citizens and
state, between generations, between individuals etc., where the parties
are engaged to do something to each other using money. The principle
pacta sunt servanda has to prevail again, that means that always
equilibrium between counterparts is a must and morality is built in that
equilibrium.
We do believe that the actual stage of globalisation gives us the
incentives for a new global currency. The situation of the global financial
system tells us a lot of stories how it has to be completely restructured to
serve better global world, while the euro crisis offers the knowledge of
how a global currency should not be generated. All these lessons can
witness and call for the birth of a new international order, even if we
start with the limited idea of a better global governance.
What we do not know at this point is if a global currency can really hill
the soul and the life of the human being. But what we do know, for sure,
is that in the modern and contemporary history, any international order
has been accompanied by a monetary standard, and searching for a new
monetary standard was a drive for building a new international order,
meant to serve better the humane needs.
In our approach to evaluate events and opinions, we are not alone or
genuine, history showing momentous when the issue of a global
currency has been raised. One important event, not too far from our

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times, was signing the Bretton Woods Agreements, in 1945, for setting
up a new international monetary system, when two proposals for a
possible global currency were in competition:         the Bancor (as
supranational currency), proposed by the British economist John
Meynard Keynes and the Unitas (as an international unit of account) by
Harry Dexter White an official of the Treasure Department.
More recently, under the pressure of the effects of financial and debt
crisis and the lost trust in US dollar and euro, some important states as
Russia and China, members of the G-20, raised the issue of a new global
currency. It is interesting to mention the Paul Volker’s recent reflection
that a global economy requires a global currency. At the same time, in many
communities we see the use of local currencies from the same reason, lack
of trust in the national official currency. There is a switch in
understanding virtual money, from plastic cards we were evolving to
Bitcoin. It is issued by the users and not a central bank and is rated on
market. Recently, Germany recognized the Bitcoin for revenue and
transaction taxation purpose.
We do believe, also, that many of us studying the latest crises have had
identified a lot of inappropriate structural features, questioning the fact
the globalisation and emergence process are instrumental for our
progress. It is possible to conclude that the politicians` behaviour, even a
long time before the burst of the crisis, have abused of the common
shared values, a fact that jeopardized the credibility of any sub-system,
including monetary and financially one, helping the normal functioning
of the international order. The politicians` behaviour has become pro-
cyclical with the worst trends we live with.
This is the reason the path to a global currency should be considered one
of the most urgent political projects at the world level. This calls for a
common will and cooperation on a global scale, a project with very well
defined goals answering to the needs of all actors making the mankind
to move in a good direction. It is pity that such a project, seen as a
necessary return to the basic values (common sense) currently lacks the
power of good examples and, mostly, a strong leadership.
But, even this fear can be overcome given the following: we should
define resetting the new order as a new perspective on the definition

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and the role of “national” and its relationship with human spirit,
politics, global and international.
There is a dangerous trend to induce a general concept that society is
evolving to become more and more risky. More institutional and
regulation care for the management of a more risky society, engaging
more authorities, is costly and creates illegitimate bureaucracy. These
will limit more and more the individual freedom and its functioning
with true rules of democracy.
We tried to build more on the controlling mechanisms, leaving away the
true force of values and their appropriate practical implementing.
Authentic values correctly built and used in the societal culture exceed
the power of any regulation. In fact, the power of any regulation comes
from the values conducting the human behaviour. Otherwise, the scope
of the regulation in any domain of human life can not be achieved
properly. The change of paradigm should be more then our return to
pre-crises stage, one of the strong symbol of that change being a global
currency.

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