Rcent events in Europe, most notably the Greek crisis, suggest that the members of the EU will be intensely engaged in the next few years in reforming their own financial system, which is leading to a bnaking union gradually, but without the essential steps yet in place to begin a fiscal union. Without the latter, the euro and ECB will continue to face renewed crises when countries in Europe face debt problems.

European regionalism will force , developing countries to also develop their own safeguards from a debt, monetary and banking perspective, as the paper by Ugarteche suggests.

In this regards, I think that the double pronged approach by Oscar Ugarteche is correct.

On the one hand to use the G 20 to increase developing country influence over policies and personnel of the IMF including more heterodox economists within that body by taking control of the IMF Institute that is key in contracting new economists each year. In additon by proposing new policy issues and improving debt information and fiscal information, so that everyone really knows what is going on in each country. The IMF technical reports must be made clearer and simpler and provided to the world public interested in the world economy. Finally, any pressure to make SDR´s a possible future world currency are to be welcomed by
member developing countries, to provide some rivalry to dollar, euro and yuan.

Secondly, debate on the regional monetary and banking agreements proposed by Ugarteche and others should be the basis of another future WEA conference.

I’d agree that different economies should continue to be allowed to have their own currencies. There certainly needs to be better common standards of financial regulation, though.

The most overlooked problem is that we’ve been failing to invent our way out of the direct coupling of economies with the earth, for example. Calling the earth an “externality” was simply a foolish idea. The continual doubling of pressures on all natural systems has become the most destabilizing feature of managing currencies to continually grow. It’s producing multiple and spreading environmental catastrophes due to the impacts continuing to grow in at the same proportional rate to GDP as before.

So the compound expansion of the economy is clearly going to be ended by mounting disasters if we don’t end it ourselves by using the investment resources in a better way. I still think my proposal above is one of those “better ways”. We need the economy to take full responsibility for the impacts it causes, or we won’t have any chance of making the earth a decent home in the future.

Correction: the “complying amount” should be : “the absence of complying amounts in world tables..”
Last sentence , i.c fromoff “a GDP…” is to be eliminated as for incomprehensible.

There are at least three good reasons not to have a universal currency.
The first is the fact that not all economies grow the same nor from the same starting point, so the productivity needs of the issuing economy ends up defining the currency value whilst there are other economies at the tail end with different credit policy and exchange rate adjustment needs.
Two examples stand out: Greece that is tied to German monetary policy and Ecuador that is ties to the US. They both have stood to lose and are paying dearly for having renounced monetary sovereignty.
Secondly, from Mundell`s classic Optimal Currency Area theory, the world is not one OCA. In the best case it is the sum of many small OCA’s.
Finally, having one currency sounds more like an imperial need of the sixteenth century than a concrete proposal for the future.

John Craig

Centre for Policy and Development Systems
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