NationStates Jolt Archive


The Common Currency

Blakhole
15-04-2006, 21:16
The Allied State of Blakhole strongly believe that a common 'Inter-regional' currency would vastly improve free trade. First of all, we would like to clarify that the proposal does NOT REPLACE the local currency of individual states. The new currency can be used alongside the old currency, ONLY the new currency could be used for international trade.

We understand that having a common currency would make it easier for consumers to compare prices, and thus, with them demanding the cheaper, hence more competitive product, the common currency would improve quality of products and reduce subsidies.

We also understand that these days, the bankers/brokers/exchange markets, take out a significant proportion of the profit margin. With the presence of Common currency, this portion can be allocated equally to consumers in the form of cheaper prices and to the labourers and companies in the form of increased profits.

We also understand that certain governments subsidize their industries, block international trades through the currency-exchange market. A significant volume of trade is lost while writing out LCs and waiting for currency of the other country. This unproductive waiting time and unwanted trade-block could be reduced if the whole process of currency-exchange is taken out of the picture.

We hope that the international community see the benefit of the common currency.
Darsomir
16-04-2006, 06:48
The new currency can be used alongside the old currency, ONLY the new currency could be used for international trade.
Are you saying that we will not be allowed to use our own currencies for trade?
Zeldon 6229 Nodlez
16-04-2006, 14:06
The new currency can be used alongside the old currency, ONLY the new currency could be used for international trade..


As I see it all this does is add another currency to a market already full of many different ones. As it clearly says you can use either here. Only we add one more for international trade...

So what again is this suppose to do...?
Enn
16-04-2006, 14:26
I just wanted to check that - the phrasing isn't clear what the result is meant to be.

[edit] Bugger, done it again. Take this as being an OOC post from Darsomir.
The Remote Islands
16-04-2006, 15:50
I totally agree. I also think the trade currency should be the U.S. Dollar, or the credit card, or the Yen, or even the ball!:p :)
Ausserland
16-04-2006, 15:57
We admit to being relatively clueless on matters of economics and look forward to the comments of more knowledgeable members on this idea. But it seems to us that the idea has merit. Currently, our businesspeople involved in international trade just within our region have to keep track of the relative value of the catnip, dollar, cheese, blade, award, mysterious golden coin, mattala, krone, defaid punt, and 18 other currencies. Having a standard currency for use in international commerce would seem to be a way of simplifying matters. That should be a definite plus.

Lorelei M. Ahlmann
Ambassador-at-Large
Compadria
16-04-2006, 18:20
Compadria would support a proposal for an international trading currency strongly and we concur with the opinion of the honourable delegate of Ausserland regarding simplification of trade.

Whilst it would be for the best to retain a national currency for internal transactions and budgeting by the national government, an separate currency for foreign transactions could act as a valuable impetus for trade and prosperity. By reducing currency barriers, it would be easier to phase out tariffs and subsidies, to track international white-collar crime and money laundering, as well as international terrorist financing and criminal syndicate operations, operating on an international scale.

We would support such an idea therefore.

May the blessings of our otters be upon you all.

Leonard Otterby
Ambassador for the Republic of Compadria to the U.N.
Wyldtree
16-04-2006, 19:45
I concur with the representatives of Ausserland and Compadria. An international currency for trade would prove useful.
Commustan
16-04-2006, 21:39
My nation has no currency.
GhostEmperor
16-04-2006, 21:52
Isn't currency inherently relative to all products, goods, services, and other currencies? An international currency would only create an additional conversion rate on top of the one normally used between nations.

Normally, conversions are handled like this:

Nation A Currency => Nation B Currency

With an international currency, conversions would look like this:

Nation A Currency => International Currency => Nation B Currency

While this may seem like only a small change, the overhead costs of such an idea could be astronomical. I respectfully oppose this idea.
Ausserland
16-04-2006, 23:30
Isn't currency inherently relative to all products, goods, services, and other currencies? An international currency would only create an additional conversion rate on top of the one normally used between nations.

Normally, conversions are handled like this:

Nation A Currency => Nation B Currency

With an international currency, conversions would look like this:

Nation A Currency => International Currency => Nation B Currency

While this may seem like only a small change, the overhead costs of such an idea could be astronomical. I respectfully oppose this idea.

We think it would be good to separate the ideas of conversion and trade. As the representative of GhostEmperor suggests, conversion would be more complicated if the common currency was mandated for use as an intermediate. But we don't think that's the intent here. We imagine your banks and currency exchanges would still be able to convert directly from one national currency to another. No change.

The value of this idea is in trade, not conversion. Let's say I want to market my widgets in five different countries. One buyer offers to pay 27 krones per wizard; another offers 48.5 defaid punts, a third 193 mattalas, and so on. I have to know the current value in tollens (my national currency) of six different national currencies in order to make my marketing decisions. Wouldn't it be better if the trading nations all talked in terms of a standard, common currency? Then I'd only have to do one conversion: the standard into my national currency.

We hope to see a draft proposal from the honorable member from Blakhole.

Hurlbot Barfanger
Ambassador to the United Nations
GhostEmperor
17-04-2006, 00:10
The problem is still present, even if the intent is only for trade. Conversions are an inherent part of trading between different currencies. Let's use your example. You have one country attempting to sell to five other countries, each with different currencies. Under normal conditions, you would have to make the conversion five times; once to each other nation.

But using the standardized trade currency, conversions must be made six times: one time from each of the six nations into the trade standard. Not only does this add an additional calculation (and since there are millions or billions of transactions each day, let alone in a single fiscal year, this "minor" calculation adds up quite quickly), but it shoves part of this calculation burden onto other nations who may not even end up purchasing the good or service (buyers don't normally pay any type of fee to merely browse goods; that burden should rightfully fall upon the seller).

But that's just how I see it. I do see the logic behind a standard trade currency; however, it only makes sense when in an international marketplace; once you attempt to mesh it with intranational currency, the overhead costs skyrocket.
Dancing Bananland
17-04-2006, 02:38
Disregarding its other aspects, negative or positive, the delegation from Dancing Bananaland must acknowledge the usefulness of a currency standard against which all other currencies can be measured. This would prove incredibly helpful in determening the international value of a given national currency. Without such a standard, such comparisons would have to be made on a case to case level, against other currencys that are also in flux, causing difficulty in determing whether the international value of a currency is rising or falling. A constant level standard of currency value would prove immensly valuable in this situation.

Although other aspects of this notion are yet to be debated, the delegation from Dancing Bananaland supports the creation of a standard of worth and value.
Cluichstan
17-04-2006, 03:35
You won't accept our empty beer cans? Hell, CPESL accepts all your ridiculous currencies when your people pay for its "services"...
Zeldon 6229 Nodlez
17-04-2006, 04:09
Nation A Currency => Nation B Currency

With an international currency, conversions would look like this:

Nation A Currency => International Currency => Nation B Currency

While this may seem like only a small change, the overhead costs of such an idea could be astronomical. I respectfully oppose this idea.


As long as each nation already has their own currency and uses it any middle currency would only mean the creation of a cost in the money market... Think how much it cost you today to do a simple transaction at most local banks with just one currency involved..
Compadria
17-04-2006, 12:32
My nation has no currency.

Purely out of interest, how does your nation's economy work then?

May the blessings of our otters be upon you.

Leonard Otterby
Ambassador for the Republic of Compadria to the U.N.
My Travelling Harem
17-04-2006, 14:54
Yet another bad idea.
It is not for the UN to dictate the currency of member states.

You guys do get that the UN is not a government, right?

--Rooty
Wyldtree
17-04-2006, 17:46
It is not for the UN to dictate the currency of member states.
You speak of this as if the NSUN is trying to replace the currency member states have now. Such is not the case. This idea only applies to international trade and of course that is a matter the NSUN deals with.
You guys do get that the UN is not a government, right?
OOC: The RL UN isn't. The NSUN pretty well is a government.
Hirota
17-04-2006, 17:50
OOC: The RL UN isn't. The NSUN pretty well is a government.Opinion varies. I think it of it to similar to the RL EU.
Wyldtree
17-04-2006, 17:55
Opinion varies. I think it of it to similar to the RL EU.
Well it's a voting body that has pretty well everything within it's boundaries theoretically so the least it has the potential to be a world government (not that my nation wants it to be). As Hack said in the rulesset thread it's pretty well the setup of a republic... but I don't want to hijack here. Just found that little arguement/protest to the NSUN establishing an international trade currency to be rather silly.
Hirota
17-04-2006, 17:57
Just found that little arguement/protest to the NSUN establishing an international trade currency to be rather silly.You are not the only one. There are better arguements to use.
My Travelling Harem
17-04-2006, 18:21
You speak of this as if the NSUN is trying to replace the currency member states have now. Such is not the case. This idea only applies to international trade and of course that is a matter the NSUN deals with.

So, you would expect member nations to have two currencies then? One for their own use and one for trade? Yeah, that's a much better idea.
What would you do about stock markets?
Do you have any sort of plan that might outline what the exchange rate for this trade currency to the many other currencies would be?

Again, poorly thought out idea.
It is not within the purview ofthe UN to dictate the currencies of nations, trade or otherwise.

--Rooty
Wyldtree
17-04-2006, 18:42
So, you would expect member nations to have two currencies then? One for their own use and one for trade? Yeah, that's a much better idea.
What would you do about stock markets?
Do you have any sort of plan that might outline what the exchange rate for this trade currency to the many other currencies would be?
Psst. It's not my resolution/idea. I'm not doing anything. I was simply saying what this advocates... two currencies. This is only in the developmental stages anyways. I haven't seen Any resolution so far that outlines the implementation so all I can say at this time is that in theory it is a good idea.
It is not within the purview ofthe UN to dictate the currencies of nations, trade or otherwise.
This is what bothers me about your arguement and why I replied. Yes... it is within the NSUN's scope to do this...
My Travelling Harem
17-04-2006, 19:14
Psst. It's not my resolution/idea. I'm not doing anything. I was simply saying what this advocates... two currencies.
Yeah, I know.
I mean you in the generic sense, not you as in "You there, Wyldtree..."

Yes... it is within the NSUN's scope to do this...
Why? It shouldn't be.
Stop and think about what would happen if the real UN were to propose a standardized currency for all trade. It would be nothing short of global, economic catastrophe.

--Rooty
Compadria
17-04-2006, 19:26
Why? It shouldn't be.
Stop and think about what would happen if the real UN were to propose a standardized currency for all trade. It would be nothing short of global, economic catastrophe.

This isn't the real U.N., besides this would reduce barriers to trade through adoption of a common external currency for international transactions. It would be a great boost for the global economy, not a disaster.

May the blessings of our otters be upon you.

Leonard Otterby
Ambassador for the Republic of Compadria to the U.N.
Parasinia
17-04-2006, 19:33
What if the regional currency is stronger then the nation one? What if it is weaker?
Ceorana
17-04-2006, 23:29
The problem is still present, even if the intent is only for trade. Conversions are an inherent part of trading between different currencies. Let's use your example. You have one country attempting to sell to five other countries, each with different currencies. Under normal conditions, you would have to make the conversion five times; once to each other nation.

But using the standardized trade currency, conversions must be made six times: one time from each of the six nations into the trade standard.

<snip>
No. With the new currency, only one exchange must be used: from home nation currency to trade currency. Then the other nations change it back to their home currencies, or just keep it as is to trade with other nations.
GhostEmperor
17-04-2006, 23:57
No. With the new currency, only one exchange must be used: from home nation currency to trade currency. Then the other nations change it back to their home currencies, or just keep it as is to trade with other nations.

That means there are at least two exchanges that need to be made, not just one (Nation A => Trade Standard => Nation B as opposed to simply Nation A => Nation B). While the seller may only need to use one conversion, the buyer must complete another conversion back, which adds overhead costs (again, as opposed to simply one conversion between each country). This also shifts some of the economic burden upon the buyer for simply assertaining the price of a product; in my humble opinion, buyers should not have to waste either time or money converting currency when that cost rightfully falls upon the seller. I respectfully find this to be an illogical and burdensome proposal.
The Anglophone Peoples
18-04-2006, 01:29
Bad idea.

How will things like the value of the regional currency be established? By fiat, as equal to an amount of precious metal, or from a basket defined on a certain day?

Also, who will be in charge of making the money? The profit from coining can be very siginifcant portion of a government's budget.

How much would it cost for this changeover to occur? Placing the new currency in circulation would be expensive.

This essentially replicates existing finiancial markets. It adds unnecesscary complexity.
Bigbadass
18-04-2006, 04:22
from the bigbadass'' pussy will work just fine for my currency.;:upyours:
Cluichstan
18-04-2006, 12:25
from the bigbadass'' pussy will work just fine for my currency.;:upyours:

Yeah....buh-bye. :rolleyes:

As for this entire debate, well, all I can say is, where's Fonzo when you need him?
Zeldon 6229 Nodlez
18-04-2006, 12:41
This isn't the real U.N., besides this would reduce barriers to trade through adoption of a common external currency for international transactions. It would be a great boost for the global economy, not a disaster..

But with 2/3 of the NS world not in the UN consider now you have to convert to this new TRADE CURRENCY to trade.... with just 1/3 of NS world and still all the other currency to trade with the rest of the nonUN world of NS. Adding one more step to slow down things between UN members in trade... also not to mention any added cost of dealing in this new currency.
My Travelling Harem
18-04-2006, 15:32
How will things like the value of the regional currency be established? By fiat, as equal to an amount of precious metal, or from a basket defined on a certain day?
How much would it cost for this changeover to occur? Placing the new currency in circulation would be expensive.
This essentially replicates existing finiancial markets. It adds unnecesscary complexity.

Exactly.
Anglophone is right (and not just b/c they agree with me).
Adding an extra currency would result in economic disaster.

--Rooty
Hirota
18-04-2006, 16:15
Adding an extra currency would result in economic disaster.RL tells me that is unlikely to be the case.

Case in point - the Euro in the UK.

We have shops accepting the euro as currency in the UK (and I imagine in other EU nations who have not adopted the euro). We do not see economic disaster. The only nations which have struggled are those who have fully adopted the euro.
Dancing Bananland
18-04-2006, 21:43
Yes, a new currency would he more of a hinderance than a help to most if not all economies...however, as stated earlier, the Dancing Bananalandian delegation beleives in the creation of a standard of value, whatever it may be, for the ease of international trade involving multiple nations, as well as stock investment in national currencies.
St Edmund
19-04-2006, 14:06
Opinion varies. I think it of it to similar to the RL EU.

OOC: Except that it's a lot easier to leave than the EU...
And if a proposed resolution gets voted down then the UN Secretariat, unlike the European Commission, doesn't just introduce its contents (possibly in disguise) anyway...
And presumably its annual accounts haven't been rejected as inadequate by the auditors for the last eleven consecutive years...
Wyldtree
19-04-2006, 19:37
RL tells me that is unlikely to be the case.

Case in point - the Euro in the UK.

We have shops accepting the euro as currency in the UK (and I imagine in other EU nations who have not adopted the euro). We do not see economic disaster. The only nations which have struggled are those who have fully adopted the euro.

I agree. That's pretty well what came to mind when I was considering the benefits of this.
Tzorsland
19-04-2006, 20:04
But having multiply active currencies is not the same as having a "common" currency that you have to use to go from one currency to another.

Having the "common" currency forces you to go through that common currency in order to do international business. If you are in Nation A and you want to to business with Nation B, the guy in Nation B is going to want his own national currency. You can't directly buy Nation B's currency, you have to buy the Common currency and then use that to buy Nation B's currency.

So instead of having a web of currency conversions, you have a central hub which forces twice as many currency conversions in order to get the job done. Moreover, the intermediate currency is per se a worthless currency, as it's value is only defined in terms of the other currencies. (As all currency markets are always volitile and the common currency is not used directly by any one nation it makes little sense to list anything using the common currency.)
Cluichstan
19-04-2006, 20:15
*snip*

Yahtzee!
The Most Glorious Hack
20-04-2006, 04:52
[idiocy]How did I miss this? :eek:

HEADCRUSHED!
http://img.photobucket.com/albums/v251/Tindalos/Silly%20Things/rummycrush.jpg
My Travelling Harem
20-04-2006, 15:19
You think the Euro was a success??

--Rooty
Compadria
20-04-2006, 15:22
OOC: Too soon to tell probably.
Zabbar Malta
21-04-2006, 07:43
After reviewing the proposal, the delegation from Zabbar Malta stongly agrees to a currency that can be used for internation trade...

Just one question .... Is there going to be an ammount of time for the UN Members to put into action the currency, if it passes..

Ruben Zammit
Head of Democratic Republic of Zabbar Malta
Hirota
21-04-2006, 11:51
You think the Euro was a success??

--RootyNot yet. Too many countries adopted it which were already starting to struggle economically (Italy, france, Germany). The euro got affected by their failures.

But this is off topic.
Imperiux
21-04-2006, 12:47
While a common currency might improve trade and economics, it is uneffective when it runs alongside local currency. Personally I favour local currency over common currency because economic growth is stronger, regardless of radical ups and downs. Besides, who wants to use the same currency every time they go abroad? I'm not usually one if favour of culture but I think whatever their currency, they should keep it. If they wosh to conform to a currency that is the same as someone elses fine by me, but let's just realise that a common currency infringes our National Sovereignity.