Should dollar stay as world currency?
Nowadays such currencies as euro, Yuan and pound are growing up while dollars position is decreasing. Dollar depreciation is thought by many to be a good method of increasing output, investment and employment, while at the same time helping to reduce our current account deficit. At first glance, it seems obvious; a weaker dollar will make U.S. exports comparatively cheaper and thus increase output, investment and employment. In reality the theoretical models empirical evidence are much more complex.Thats why many countries started to think about creating new world currency. Most commodities and major goods are exchanged based on the US dollar, however it has a negative effect on economics of developing countries.
The first reason why should world currency be changed is that todays using of the US dollar has many disatvantages for all countries and US too. If the dollar loses status as the world's most reliable currency the United States will lose the right to print money to pay its debt. It will be forced to pay this debt. Firstly, the dollar depreciation relative to other currencies will increase output and profits for firms that export goods. The simplest form of this argument states that a weaker dollar will make American exports comparatively cheaper and therefore, foreign consumers will demand more U.S. exports. This increased demand for exports will increase output for American firms. Secondly, The United States dollar is not backed by gold or any other precious metal. In the years that followed the establishment of the dollar as the United States official form of currency, the dollar experienced many evolutions. For over a century, the United States dollar was indeed backed by the precious metal, gold, even though dollar coins were often made from silver. Over the time that the United States dollar was backed by gold, it experienced major fluctuations in value in relation to the world market. Due to these fluctuations in value and the need to protect the
The first reason why should world currency be changed is that todays using of the US dollar has many disatvantages for all countries and US too. If the dollar loses status as the world's most reliable currency the United States will lose the right to print money to pay its debt. It will be forced to pay this debt. Firstly, the dollar depreciation relative to other currencies will increase output and profits for firms that export goods. The simplest form of this argument states that a weaker dollar will make American exports comparatively cheaper and therefore, foreign consumers will demand more U.S. exports. This increased demand for exports will increase output for American firms. Secondly, The United States dollar is not backed by gold or any other precious metal. In the years that followed the establishment of the dollar as the United States official form of currency, the dollar experienced many evolutions. For over a century, the United States dollar was indeed backed by the precious metal, gold, even though dollar coins were often made from silver. Over the time that the United States dollar was backed by gold, it experienced major fluctuations in value in relation to the world market. Due to these fluctuations in value and the need to protect the