Fiat Currency and its Role in the Global Economy Essay

Fiat Currency and its Role in the Global Economy - testify ExampleWhile the Bretton-Woods conference had proposed a supranational gold this idea was ignored and instead international currencies were pegged to the United States dollar. In the 1970s the United States went shoot the gold standard, effectively moving all serviceman currencies to floating. There have been a number of attempts at supranational currency including the implementation of the SDR still, there ar some weaknesses to this currency, including it not effectively reflecting contemporary GDP concerns. In addition to the SDR there was the ECU, the ASU, and the African Monetary Unit in large part these currencies argon or were ineffective as a world currency for their largely regional affiliations. Recognizing the inefficiency of these currency units the WDX Organisation Limited was established to develop a much effective world currency. Incorporating modern risk theory, mathematics, and real-time technology infra structure this organization developed the Wocu. In addition, the Wocu a major innovative aspect of the Wocu is that it implements a research-based algorithm that is unknown to outside sources. b) Specification of thesis main point The main thesis is that the Wocu is both effective and necessary as a world currency in response to the current fiat model. ... This will allay concerns with the dollar as the world currency, allow countries to have their own monetary form _or_ system of government, and ignore the need for foreign currency reserves. Additionally, it will have benefits to corporate treasurer these include reducing currency risk and hedging against volatility, as well as advantages in pricing sales and purchasing, settling transaction, risk management, and raising capital. c) Three supporting opinions/reasons There are a number of supporting perspectives on implementing a world currency. Perhaps the central thorough-put in these supportive arguments is the notion that the use of fiat currencies creates a currency environment subject to political manipulation and volatility. unmatchable such consideration has emerged from the United States economical Report. This report indicates that the European Sovereign Debt Crisis has had an immediate seismic disturbance on United States monetary policy (Economic policy Country, 2010). The report indicates that, The ripple effects from the euro areas public debt crisis have led market participants to expect a later start of rate hikes (Economic policy Country, 2010, pg. 12). While not necessarily negative, such an impact could conceivably be avoided through a world currency. While this report demonstrates the direct impact of fiat currency, other research has make outd for much more profound implications. Ghosh, Roy & Bandyopadhyay (2011) quantitatively examined various elements that directly contributed to volatility in the Indian stock market. Their research revealed that currency volatility a direct resu lt of fiat money had a significant impact on stock valuation. Al-Shibli (2011) goes as far as to argue that in abandoning Bretton-Woods and