The Hindu Business Line : Dual currency approach

This is with reference to the “Common currency: Pitfalls and prospects” (Business Line, October 26). A lot is being discussed about the vulnerability of the US dollar as a reserve currency, which forms nearly 60 per cent of total global currency reserves.

The author has rightly elaborated the threats arising out of the introduction of a common global currency with examples of inflation, interest and fluctuations in exchange. At the same time, in the larger interest of the world economy , a policy for dual currency may be adopted.

The common global currency, unlike the dollar which, for all practical purposes, is a global currency, can be managed by an apex financial body representing all the countries, along with the currencies of individual countries. The common global currency can have the guarantee of all member-nations for its value. This will not only help in better management of the overall exchange scenario worldwide but will also guard against the fear of a sudden depletion of their reserves in adverse conditions. Gradually, with the increase in comfort level and smoothening of the process, individual countries may adopt the global currency at domestic level without any feeling of losing sovereignty.

Alok Sharan Delhi