Economic Advantages and Disadvantages of a One Global Currency

Economic Advantages and Disadvantages of a One Global Currency Introduction The recent history of currency exchange rates includes 3 huge changes starting from the end of the XIX to the end of the XX century. Pure gold standard has been the basis for trading between nations during 1879 and 1914 (Abdel-Monem, n.d.). At the beginning of World War I, this standard ceased to exist and in 1920 countries permitted greater exchange rate flexibility (Jereissati, 1999), which however, did not last long and after the end of the World War II the Bretton-Woods system has been implemented. This standard has been created as a result of numerous meetings between the World War II winning states with the final conference taking place at the Hotel in Bretton Woods, New Hampshire. The standard took the name of this last conferences venue (Grabbe, 1996, as cited in Tucker, 2008). In August 15, 1971 Richard Nixon in his speech announced that the price of dollar will be no longer fixed against gold. This has put an end to the Bretton-Woods system and has set-off a new era in international monetary system. The main feature of this new system is that it is neither a pure gold standard nor a pure exchange rate float, but rather a system in between these two extremes (Meese, 1990). This standard exists until today and has been strongly undermined during the latest financial crisis. In this respect, the idea of having a single global currency is widely discussed as an alternative monetary system. This literature review outlines advantages and disadvantages of a single global currency. The Single Global Currency The Concept of a Single Global Currency Single global currency, as one can see from the example of Euro, signifies that countries, where this currency would be implemented, should be the members of a monetary union with one central bank, common currency, a coherent and binding financial policy. Scandinavian Currency Union (SCU), which included Denmark, Norway and Sweden, established a common currency unit, although central banks in each of those countries retained control over monetary policy and did not experience significant loss of independence (Bergman, 1999). The single global currency is a much more complicated issue. History recognizes a lot of monetary unions of different size, both formal and informal. However the most successful example came from the European Union, which is the Economic Monetary Union (EMU). There are also two proposed single currencies, which potentially may come near the Euro. They are the GCC monetary union currency and the Asian Monetary Unit. Economic Advantages of a Single Global Currency The advantages of a global currency are as follows. First of all, single currency will eliminate transaction costs, which are linked to international financial operations. This will affect both: ordinary citizens who plan to spend money abroad and multinational corporations undertaking international transactions. Different currencies create a lot of inconveniences and barriers. Exchanging one currency for another always involves currency exchange fees, as banks, which provide such currency exchanges, require commissions for their services. In the scale of countries or even monetary unions such expenditures on currency exchange fees may reach high amounts. By eliminating the need for currency exchange the monetary unions may save resources (Buiter, 1999, as cited in Bonpasse, 2008). For instance, the European Commission (EC) has estimated that due to a single currency across the European Union 13 to 20 billion of Euro were saved per year (Grauwe, 2007). Moreover the difference between the currencies exchange rates becomes an obstacle for a free flow of trade. As the barrier of different currencies will disappear, the number of international transactions will increase. Bordo and James (2006) said that neighboring countries, which are members of a common monetary union, tend to trade more frequently with each other. In a study conducted by Micco, Stein, and Ordonez (2003) they found out that trade between EU members increased by 8 to 16%, after EMU was created (as cited in Lane, 2006) Currency risks nowadays are one of the major disadvantages of the modern international financial system. Everything, ranged from a natural disaster to terroristic attack, may affect the value of the currency and as a result cause loss. Foreign investors, as well as stock holders, have to hedge their risk, which also demands additional expenditures. Implementation of the single global currency will eliminate the risk of loss, due to currency fluctuations. Moreover Bonpasse (n.d.) points out that the adoption of a single global currency will save 400 billion of US dollars annually in foreign exchange transaction costs, which come from trading 3.8 trillion US dollars every trading day. Currency misalignment is a process when central bank increases or decreases the value of its currency against another for different purposes. The most known cases of currency manipulation are the cases of China and Japan. Both countries artificially undervalued their currencies, which made their exports more competitive. As the value of Yen and Yuan decreases, the prices on Japanese and Chinese products will consequently fall. This has created a great advantage for Japanese and Chinese products in the market. Today the low value of these currencies, which has nothing to do with the real situation, has created huge difficulties for the economies of Europe and USA. Japan and China, based on all criteria related to the IMF definition, have been persistently manipulating their currencies to gain an unfair competitive advantage (Preeg, n.d.). Obviously with a single global currency, currency manipulation by individual countries would be impossible. Moreover there will be no need of such k inds of unfair methods. It is easy to perceive that problems of contemporary monetary system are currency rate fluctuations. As most of the currencies are free and are not fixed to any value, there is a huge possibility for currency speculations. For instance, speculative opportunities of FOREX market may have a great impact on economics of countries and their financial situation. The speculative attack on the Swedish Krona in 1992 is a perfect example. The Central Bank of Sweden had to raise the interest rate of its currency which caused devaluation of the Krona. Receiving income from currency speculations is getting money out of nothing. The next benefit from implementing a single global currency will be the elimination of currency speculations existence. The single global currency will present a different choice for speculators: if they wish to speculate, they will need to choose another commodity, as the money of the people will no longer be for sale (Bonpasse, 2006). Another problem of todays financial system is international reserves or foreign exchange reserves. As the possibility of a currency crash is high, due to currency risks and currency speculations, every country holds assets in various foreign currencies, which are considered as reserve currencies. Mainly it is the US dollar, not so often it is the Euro or the UK pound. However after implementing the single global currency, this hedging method will be unnecessary. As the central bank will abandon the foreign exchange reserves, it will save a considerable amount of money. In 1992 the European Commission estimated that the future Eurozone members might be able to reduce their total international reserves by one-half or $200 billion (Bonapasse, 2008). Disadvantages of a Single Global Currency Turning to disadvantages of a Global Currency, the most negative side of it is that countries will lose the ability to control their financial policy. Today every country is able to determine their monetary policy independently. In order to have an influence on the economy, nowadays central banks of every country through influencing exchange rates and adjusting interest rates, may increase or decrease economic activity. However in case of a single global currency, changes in a local countrys finances, will demand changes in the global scale. So with the Global Currency countries will lose flexibility in their monetary policy. A uniform policy template to provide macroeconomic stability, will constrain a countrys ability to make independent interest rates and exchange rate policy (Bonpasse, as cited in Wenzel, 2007, p17). Another significant disadvantage of having a Global Currency is connected with the difference in economies of different countries. While there are only a few developed states with strong economies, the rest of the countries of the world have rather weak economies, for instance the majority of African countries or some South American countries. In the world with a common currency, the weak economies shall pull down the rest, more well off countries. If one of the members will face a crisis, the others will have to spend their resources in order to stabilize the situation. A perfect example could be the debt crisis, which recently has occurred in Greece. While the EU/IMF bailout package wasnt enough, Germany had to loan about 110 billion Euros in order to save the country from bankruptcy. In addition the crisis had a chance to spread to other countries, as it reduced confidence in the economies of other EU members. Conclusion: Is The Single Global Currency Implementable? Global Currency as a financial system has been first mentioned back in the end of XIX century. The reasons why this system still has not been implemented are rather social and political, than economical. The first obstacle is national identity. Most of the nations consider their currencies as a national symbol, equal to the flag and the anthem. Obviously people will hardly discard their own national symbol, their source of pride. Some people are tempted to view such symbols as they do their flags and national constitutional documents, and the loss of such symbols can be considered as a national loss (Bonpasse, 2008). Just imagine how hard it will be for Americans to abandon dollar and accept a currency with absolutely neutral name and with neutral images and signs. In case of a Global Currency it should be absolutely neutral, as Euro is. Political barriers also should be taken in to account. In the conditions where political tensions between two countries are possible, implementing a single currency is a huge problem. For instance, it is difficult to imagine how USA, Democratic Peoples Republic of Korea and Iran, countries which have experienced significant political tensions, would negotiate in order to accept a single currency. Or it is difficult to say how it is going to work between countries which are in state of war like North and South Korea. In addition, due to political discords, such issues as supply and printing of the Global Currency would be problematic. As an independent central bank is demanded, the first dispute within the countries would be about the location of the central bank. Every member of the global monetary union would try to pull the blanket over. It is hard to believe that after gaining membership to the global monetary union, countries would not start attempting to gain greater influence o n the central bank and hence the monetary policy. Though the process of globalization seems to be unstoppable, we are still far away from being even close to a Global Currency. In my point of view, implementation of the single global currency can be compared to the legends about Eldorado or dreams of Utopia. There is no doubt that Global Currency has more benefits than costs. The loss of control of the monetary policy is a really low price for the other advantages of this idea. Throughout the history mankind tried to give birth to a global government. League of Nations and UN could serve as examples. Esperanto as a worldwide language also has been a great proposal, which could simplify the understanding between nations. But both concepts were not successful up to this time. Unfortunately the single global currency is an idea of such type. Although globalization and the Internet did bring people around the world closer to each other, maybe we are still to different to buy food with the same money. Maybe social and cultural difference s play much bigger role in our life, than we think. USSR made an effort of erasing these differences, but where is the USSR now?

Air Cargo Article Critique

China Airlines is facing a fine of up to $85,410 in US dollars for transporting 15 barrels of iridium 192, a class 7 radioactive material, without the proper permit.   In addition to the source cited here, this article can be found in a variety of publications and sources including Google Finance, since China Airlines (TPE:2610) is a publicly traded company.The barrels were kept in a warehouse from February 23rd to February 26th when the airline made application to and received approval to transport radioactive material from the Atomic Energy Council.Employees at the Taiwan Taoyuan International Airport found relatively low radioactive levels of the iridium isotope which was being transported to Singapore from the United States.  The destination and intended use of the material is not known.   Iridium 193 is used to detect weaknesses in metal pipes, in radiotherapy, and in radiation treatment of certain cancers.This article underscores the importance of airline industry regulat ion of hazardous material transportation.   The article also underscores the importance of consistency in inspection and detection techniques in international airports.Since levels of radioactivity were low, perhaps employees in U.S. airports found no cause for concern.   It was probably assumed that the airline had the proper permit for handling and transporting the iridium.It is reasonable and correct for the Atomic Energy Council to levy a fine for not having the proper transportation permit.   However, the Council needs to work with cargo carriers, international agencies, and airports to develop uniform inspection and detection protocols.Inspection techniques should have examining transport licensing and permits as an objective.   Detection techniques should have determining acceptable radioactivity levels as an objective.   The techniques should have safe and timely transport of materials as a common goal.ReferenceCAL TO BE FINED FOR TRANSPORTING RADIOACTIVE MATERIAL WITHOUT PERMIT. (March 6, 2009). AsiaPulse News. Retrieved March 10, 2009, from General OneFile via Gale.Google Finance.   China Airlines Ltd.(Public, TPE:2610) Retrieved March 10.   2009, from http://www.google.com/finance?q=TPE:2610

Resource Distribution and its Consequences

Resources are materials found in the environment that humans use for food, fuel, clothing, and shelter. These include water, soil, minerals, vegetation, animals, air, and sunlight. People require resources to survive and thrive. How are Resources Distributed and Why? Resource distribution refers to the geographic occurrence or spatial arrangement of resources on earth. In other words, where resources are located. Any particular place may be rich in the resources people desire and poor in others. Low latitudes (latitudes close to the equator) receive more of the suns energy and much precipitation, while higher latitudes (latitudes closer to the poles) receive less of the suns energy and too little precipitation. The temperate deciduous forest biome provides a more moderate climate, along with fertile soil, timber, and abundant wildlife. The plains offer flat landscapes and fertile soil for growing crops, while steep mountains and dry deserts are more challenging. Metallic minerals are most abundant in areas with strong tectonic activity, while fossil fuels are found in rocks formed by deposition (sedimentary rocks). These are just a few of the differences in the environment that result from different natural conditions. As a result, resources are distributed unevenly across the globe. What Are The Consequences of Uneven Resource Distribution? Human settlement and population distribution. People tend to settle and cluster in places that have the resources they need to survive and thrive. The geographic factors that most influence where humans settle are water, soil, vegetation, climate, and landscape. Because South America, Africa, and Australia have fewer of these geographic advantages, they have smaller populations than North America, Europe, and Asia. Human migration. Large groups of people often migrate (move) to a place that has the resources they need or want and migrate away from a place that lacks the resources they need. The Trail of Tears, Westward Movement, and the Gold Rush are examples of historical migrations related to the desire for land and mineral resources. Economic activities in a region related to the resources in that region. Economic activities that are directly related to resources include farming, fishing, ranching, timber processing, oil and gas production, mining, and tourism. Trade. Countries may not have the resources that are important to them, but trade enables them to acquire those resources from places that do. Japan is a country with very limited natural resources, and yet is one of the richest countries in Asia. Sony, Nintendo, Canon, Toyota, Honda, Sharp, Sanyo, Nissan are successful Japanese corporations that make products that are highly-desired in other countries. As a result of trade, Japan has enough wealth to buy the resources it needs. Conquest, conflict, and war. Many historical and present-day conflicts involve nations trying to control resource-rich territories. For example, the desire for diamond and oil resources has been the root of many armed conflicts in Africa. Wealth and quality of life. The well-being and wealth of a place are determined by the quality and quantity of goods and services available to people in that place. This measure is known as the standard of living. Because natural resources are a key component of goods and services, the standard of living also gives us an idea of how many resources the people in a place have. It is important to understand that while resources are VERY important, it is not the presence of or lack of natural resources within a country that makes a country prosperous. In fact, some of the wealthier countries lack natural resources, while many poorer countries have abundant natural resources! So what do wealth and prosperity depend on? Wealth and prosperity depend on: (1) what resources a country has access to (what resources they can get or end up with) and (2) what the country does with them (the efforts and skills of workers and the technology available for making the most of those resources). How has Industrialization Led to a Redistribution of Resources and Wealth? As nations began to industrialize in the late 19th century, their demand for resources increased and imperialism was the way they got them. Imperialism involved a stronger nation taking complete control of a weaker nation. Imperialists exploited and profited from the abundant natural resources of the acquired territories. Imperialism led to a major redistribution of world resources from Latin America, Africa and Asia to Europe, Japan, and the United States. This is how industrialized nations came to control and profit from most of the worlds resources. Since citizens of the industrialized nations of Europe, Japan, and the United States have access to so many goods and services, that means they consume more of the worlds resources (about 70%) and enjoy a higher standard of living and most of the worlds wealth (about 80%). Citizens of non-industrialized countries in Africa, Latin America, and Asia control and consume far fewer of the resources they need for survival and well-being. As a result, their lives are characterized by poverty  and a low standard of living. This unequal distribution of resources, the legacy of imperialism, is the result of human rather than natural conditions.

Family Relationships Role-Plays English Lesson

Using dialogues in class allows students to work on a wide range of skills. Asking students to write up their own role-plays can extend the activity to include written work, creative development, idiomatic expressions, and so on. This sort of activity is perfect for upper-intermediate to advanced level students. This family role-play lesson focuses on relationships between family members. If your students need help developing their family-related vocabulary you, use this exploring relationships vocabulary sheet to provide help. Aim: Consolidate skills through role-play creationActivity: Creation and in-class performance of role-plays related to family relationshipsLevel: Upper-intermediate to advanced Lesson Outline Use this activity as a larger theme-related objective focusing on vocabulary and communication skills related to family relationships.Quickly review the language of compromise. Write helpful phrases and expressions on the board so the students can reference these later in the activity.Pair up students. Ask them to imagine various scenarios that could lead to interesting discussions in the family.Hand out the role-play sheet and ask students to choose a scenario from those provided. If students are not interested in any of the provided role-play situations, ask them to use one of the scenarios they came up with in the warm-up activity.Have students write out their role-play.Assist students checking their grammar, suggesting alternate appropriate phrases and vocabulary.Allow students ample time to practice their role-play. If they can manage to memorize the role-play, the final performance will most likely be much more entertaining and instructive for all involved.Students perform thei r role-plays for the entire class.As a follow-up activity, ask students to choose one of the role-plays they were not involved in and write up a short summary of the conversation. Family Role-Plays Choose a role-play from one of the following scenarios. Write it up with your partner, and perform it for your classmates. Your writing will be checked for grammar, punctuation, spelling, etc., as will your participation, pronunciation, and interaction in the role-play. The role-play should last at least 2 minutes. You are a student at an English institute outside of your country. You’d like your parents to send you some more spending money. Telephone your father (your partner in the role-play) and ask for more money. Your father feels that you are spending too much money. Come to a compromise.You are visiting your cousin (your partner) whom you haven’t seen in a long time. Catch up on all the news from your two families, as well as from your own lives.You are a student who has improved at school, but your mother/father (your partner) doesn’t feel that you have done enough. Discuss together what you can do to improve your grades, but also recognize your increased efforts.You are the aunt/uncle of your partner. Your partner wants to ask you about what life was like with your brother (your partner’s father) when you were both teenagers. Have a discussion about the old times.You would like to get married to a man/woman your parents do not approve of. Have a discussion w ith your mother/father (your partner) about your plans. Try to break the news gently, while still maintaining your desire to get married.You are having a discussion with your husband/wife (your partner) about your son who is having problems at school. Accuse each other of not being a good parent, but try to come to a conclusion that will help your child.You are a technological wizard and have a new idea for a great startup on the internet. Try to convince your father to fund your business with a $100,000 loan. Your partner will be your father who is very skeptical about your idea because he thinks you should be a doctor.