Paul Volcker, former head of the US Federal Reserve and now a Barack Obama confidant, is the latest in a long line of worthies who have argued that a global economy needs nothing less than a global currency.
There is now an important new addition to the list of global currency enthusiasts—the Chinese central bank. Its governor Zhou Xiaochuan has written in a new essay that the world needs a common currency managed by the International Monetary Fund.
Leaders from the Group of Twenty nations are to meet in London on 2 April to discuss how they can get the world economy out of its current mess. The Chinese statement may be a clever ploy to keep the pressure on the US and gain more leverage during the talks.
Dollar dominance is likely to be under threat as world economic power gets disbursed. But setting up a global currency is not easy. At the very least, all nations countries will have to converge to similar levels of public debt and inflation. It’s a tall order, but the Chinese move is an interesting one.