Essays

In the foreign exchange market and international finance, a world  Currency, supranational currency, or global currency refers to a currency in which the vast majority of international transactions take place and which serves as the world's primary reserve currency. The US dollar, and euro to a lesser extent, is by far the most used currencies in terms of global Reserves. Around 40 to 60 per cent of international financial transactions are denominated in US dollars.

Since the mid-20th century, the de facto world currency has been the United States dollar. For decades the dollar has also been the world's   principal reserve currency and even today the dollar continues to dominate global currency reserves, with 63.9 per cent held in dollars, as compared to 26.5 per cent held in euro. While many of the world's currencies are pegged against the dollar, some countries such as educator, El Salvador, and Panama, has gone even further mill eliminated their own currency in favor of the United States dollar

Since 1999, the dollar's dominance has begun to be eroded by the euro, which represents a larger size economy, and has the prospect of more countries adopting the euro as their national currency. The euro inherited the status of a major reserve currency from the German Mark (DM), and since then its contribution to official reserves has risen as banks seek to diversify their reserves and trade in the euro zone continues to expand. As with the dollar, quite a few of the world's currencies are pegged against the euro. These include the Eastern European currencies like the Estonian kroon and the Bulgarian lev, plus several West African currencies like the Cape Verdean escudo and the CFA franc. Other European countries—like Andorra, Monaco, Montenegro, San Marino, and Vatican City—while not being EU members, have adopted the euro due to currency unions with member states, or by unilaterally superseding their own currencies. In December 2006, the euro surpassed the dollar in the combined value of cash in circulation.

Prior to and during most of the 1800s, international trade was denominated in terms of currencies that represented weights of gold. Most national currencies at the time were in essence merely different ways of measuring gold weights. The emerging collapse of the international gold standard around the time of World War I had significant implications for global trade. In the period following the Bretton Woods Conference of 1944, exchange rates around the world were pegged against the United States dollar, which could be exchanged for a fixed amount of gold. This reinforced the dominance of the US dollar as a global currency. During the 1980s, the Japanese yen became increasingly used as an international currency, but that usage diminished with the Japanese recession in the 1990s.

An alternative definition of a world or global currency refers to a hypothetical single global currency or super currency', as the proposed terra or the Dey (acronym for Dollar Euro Yen), produced and supported by a central bank which is used for all transactions around the world, regardless of the nationality of the entities (individuals, corporations, governments, or other organizations) involved in the transaction. No such official currency currently exists and (here are many different variations of the idea, including a possibility that it would be on the gold standard. Another variance suggested is the digital gold currency, which can be viewed as an example of how global currency can be implemented without achieving national government consensus. Another alternative is a world reserve currency issued by the International Monetary Fund, as an evolution of the existing Special Drawing Rights and used as reserve assets by all national and regional central banks.

In March 2009, as a result of the global economic crisis, china and russia pressed for urgent consideration of a global currency an UN p.mcl has proposed greatly expanding the IMF's SDRs or special drawing Rights. The call for creative reform of the existing international monetary system towards an international reserve currency is being ph. in significantly reduce the risks of a future crisis and enhance crisis management capability. IMF's Special Drawing Rights, a currency basket comprising dollars, euros, yen, reals and sterling could serve as. a super sovereign reserve currency, not easily influenced by the policies  of individual countries.

Botable among other proposals for a supranational currency is the proposal Venezuelan President Hugo Chavez who proposed the creation of the Petro as a supranational currency, in order to face the instability that the generation of fiat currency has caused in the world economy. He suggested that the petro-currency should be backed by the huge oil reserves of the oil producing countries.