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17 The Case for Currency Diversity
Q: If you could change one thing about the industry, what would it be?
A: The either/or syndrome that runs through every level of the comic book industry. As a kid you
think you have to pick wither Marvel or DC. Later, you either like superheroes or you like
alternative comics. Color vs. B&W. Self­published vs. having a publisher. Some peope think you
can only like one thing and never the other, but of course the only thing that matters is good
comics.
– Jeff Smith, creator of the comic book epic Bone 1
As discussed in detail in Chapter 8, a healthy economy needs to be run as a holarchy,
with different levels of economies that are independent yet cooperate with one another.
To this end, a complex mix of competing currencies is needed in order to ensure stability
and sufficiency. Local currencies will encourage local trade, national currencies will
encourage national trade and supranational currencies will encourage trade within that
supranational zone. This has been seen with the introduction of the euro, where it has
been found that traders are more likely to trade within their currency zone than in a
zone with a different currency. In Chapter 8 I explained the need for an international
currency – namely, to enable international trade – and in Chapter 14 I discussed the
proposal for the bancor suggested by economist John Maynard Keynes at the Bretton
Woods Conference in 1944. Unfortunately, the bancor was not adopted and instead the
US dollar effectively became the international currency instead, giving the US a huge
advantage over other nations. There still is no international currency to date.
In this chapter I take a brief look at the euro, focus in depth on the debates for and
against a supranational currency for New Zealand, and rebuff some common objections
to currency diversity.
The Euro
Instead of an ideal situation where we have currency diversity, the world is moving
towards fewer and fewer currencies. An example of this is the euro, whose participating
member countries have abandoned their national currencies in favour of a single
supranational one. Before this single currency was adopted by 11 (later 12) members of
the European Union (EU) in 1999, there was much debate on its pros and cons. Indeed,
citizens of Denmark and the UK voted to opt out of the system, while Sweden and the 10
countries that joined the EU in 2004 will adopt the euro only when they have met the
necessary conditions.
So what is a common currency or a single currency? A common currency is
essentially the ultimate in economic integration of states, known as currency union,
without each having to surrender its political identity as a nation. A single currency
circulates in the zone, a single monetary authority operates, maintaining a common pool