Forex FAQs: How feasible would it be to reboot currency on a global scale?

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Forex FAQs: How feasible would it be to reboot currency on a global scale?
Source: Flickr/Karel Chladek
This question was originally answered on Quora by Andrew Beattie

A worldwide reboot of all currencies would require a centralized power issuing all the currencies. That's not the case, nor is it desirable. Instead, the Eurozone is the closest we have to any multi-nation currency block, and it is a good candidate for breakup due to the strain of getting multiple nations to all adopt the same fiscal policies.

That said, the answer to the question is that currencies reboot on an individual basis with surprising regularity. It is usually referred to as a revaluation or a devaluation rather than a reboot, but that is what it is. Extending the metaphor, there are even soft reboots in the form of inflation or deflation (rarer than inflation).

Currency and the system for valuing it isn't the center of this situation - the borrowing and spending of national governments is. Replacing the entire currency system would still leave the issue of debt. Erasing all the debt would bankrupt banks, pension funds, investors, other nations and so on. More than likely, the solution will be a combination of a Eurozone breakup and a haircut for the lenders to the governments, but not a complete default on debt.

I don't know if a world where the leaders set all the financial rules would be a good thing. The areas the leaders control - borrowing and spending - are part of the current mess.

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About Andrew Beattie
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Andrew Beattie has spent most of his career writing, editing and managing financial content as well as more general web site material in all its many forms. He is especially interested in the future of search and the application of analytics to the business world. He has been a long-time contributor to and is currently venturing forth on ForexDictionary.
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