I was just reading this article from a 2009 issue of New Dawn Magazine. It is well worth a read just to see how accurate the article from The Economist in 1988 is turning out to be. I believe the IMF and World Bank have set a deadline for 2015 to introduce SDR's as a replacement for the $USD as a global reserve but it may take some time to implement. I know that Russia is pushing to establish a Eurasian Union right now and it is said that it will rival the European Union, so it will be an interesting next couple of years to say the least.
Below is an excerpt from the article in New Dawn. See the full article here
A Global Currency
by Andrew Marshal
In 1988, The Economist ran an
article titled, ‘Get Ready for the Phoenix’, in which they wrote, “thirty years
from now, Americans, Japanese, Europeans, and people in many other rich
countries and some relatively poor ones will probably be paying for their
shopping with the same currency. Prices will be quoted not in dollars, yen or
D-marks but in, let’s say, the phoenix. The phoenix will be favoured by
companies and shoppers because it will be more convenient than today’s national
currencies, which by then will seem a quaint cause of much disruption to
economic life in the late twentieth century.”
The article stated that, “The market crash [of 1987] taught [governments] that the pretence of policy cooperation can be worse than nothing, and that until real co-operation is feasible (ie, until governments surrender some economic sovereignty) further attempts to peg currencies will flounder.”
Amazingly the author of the article adds that, “Several more big exchange-rate upsets, a few more stockmarket crashes and probably a slump or two will be needed before politicians are willing to face squarely up to that choice. This points to a muddled sequence of emergency followed by patch-up followed by emergency, stretching out far beyond 2018 – except for two things. As time passes, the damage caused by currency instability is gradually going to mount; and the very trends that will make it mount are making the utopia of monetary union feasible.”
The article advocated the formation of a global central bank, perhaps through the IMF, and “this means a big loss of economic sovereignty, but the trends that make the phoenix so appealing are taking that sovereignty away in any case.”
The article concludes in stating that, “The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today. In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power.” The last sentence says, “Pencil in the phoenix for around 2018, and welcome it when it comes.”34
Former US Federal Reserve Governor Paul Volcker has said that, “if we are to have a truly global economy, a single world currency makes sense.” A European Central Bank executive stated that, “we might one day have a single world currency,” in “a step towards the ideal situation of a fully integrated world.”35
The IMF held a conference in 2000 discussing how the world was segmenting into regional currency blocs and that a single world currency was possible, and that it is, in fact, preferable.36 Nobel Prize winning economist Robert Mundell has long advocated the creation of a global currency, and that it “would restore a needed coherence to the international monetary system, give the International Monetary Fund a function that would help it to promote stability, and be a catalyst for international harmony.”37
In March 2009, Russia suggested that the G20 meeting in April should “consider the possibility of creating a supra-national reserve currency or a ‘super-reserve currency’,” and to consider the IMF’s Special Drawing Rights (SDRs) in this capacity.38 A week later, China’s central bank governor proposed the creation of a global currency controlled by the IMF, replacing the US dollar as the world reserve currency, also using the IMF’s SDRs as the reserve currency basket against which all other currencies would be fixed.39
Days after this proposal, the US Treasury Secretary Timothy Geithner, former President of the New York Federal Reserve Bank, told the Council on Foreign Relations that, in response to a question about the Chinese proposal, “we’re actually quite open to that suggestion. But you should think of it as rather evolutionary, building on the current architectures, than – rather than – rather than moving us to global monetary union.”40
In late March a UN panel of economists recommended the creation of a new global currency reserve that would replace the US dollar, and that it would be an “independently administered reserve currency.”41
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