Tuesday, February 2, 2010

Euro in trouble?

There have been rumors that the Euro was going to take over the US Dollar as the global currency. However, with the entire issues that Greece is going through, I'm not sure if it can be dependable as a global currency. I think this squashes any ideas of people wanting one world currency or even seeing an Asia currency.

Even though the euro is wondrously convenient for travelers and international businesses, there's one catch: Fiscal discipline is up to each participating country, and Greece has not been disciplined. It is running a deficit of nearly 13 percent of total output, more than four times the nominal limit for countries using the euro. Its national debt is almost double the permitted limit. With its credit rating sharply downgraded, Greece must pay a stiff premium to finance that deficit. Since the Euro is shared across countries, Greece does not have the control to print more currency as it wishes, which is what other countries such as what occurs in the U.S. and China. Also other countries such as Germany seem to be ignoring Greece and acting as if it is not their problem.

If there is one world currency or an Asian currency, we would most likely have many issues similar to what is mentioned. From a world economic standpoint, I hope that this all gets resolved since another economic fiasco would cause a huge effect on the world economy.

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