With the fears of double dip recession around, I would like to say that this problem is well anticipated. In fact this is clearly visible from past many years looking at
1) The imbalances of spending and saving patterns of giant economies.
2) Currency wars going recently.
As suggested by many research papers and working papers of global bodies like World Bank and IMF, One global reserve currency might mitigate the pain of the bash. Having a global trading currency that is a proportional basket of currencies can keep things under control to an extent
For eg:
1 Global Trading Currency (GTC) =
1) 40% of USD+
2) 30% of YUAN+
3) 10% of YEN+
4) 20% of EURO.
This would make countries think twice while devaluating their currencies. The export or import advantages they get due to change in currency value would get offset by the GTC value to an extent. You might term it as against free trading, but regulation for the betterment of all is always welcome. And I doubt if USA agrees to replace USD with GTC, even if she gets benefited more from this!! J
1) The imbalances of spending and saving patterns of giant economies.
2) Currency wars going recently.
As suggested by many research papers and working papers of global bodies like World Bank and IMF, One global reserve currency might mitigate the pain of the bash. Having a global trading currency that is a proportional basket of currencies can keep things under control to an extent
For eg:
1 Global Trading Currency (GTC) =
1) 40% of USD+
2) 30% of YUAN+
3) 10% of YEN+
4) 20% of EURO.
This would make countries think twice while devaluating their currencies. The export or import advantages they get due to change in currency value would get offset by the GTC value to an extent. You might term it as against free trading, but regulation for the betterment of all is always welcome. And I doubt if USA agrees to replace USD with GTC, even if she gets benefited more from this!! J
