Monday, November 24, 2008

President of Indonesia calls for one single global currency

President of Indonesia calls for one single global currency

http://www.tempointeractive.com/hg/nasional/2008/11/05/brk,20081105-144210,uk.html

President Susilo Bambang Yudhoyono has proposed the use of one single global currency to prevent pressures on currencies, in particularly the rupiah, when economic crisis hits. This can at least maintain the stability of currency rates in each country and protect it against pressures of other currencies.

The president maintains that with a single global currency rate, there would no longer be a currency exchange crisis and money would not be commercialized. With a single currency, the function of money as a trading value will not change. “It could be done in stages, starting with the dollar, euro, or Asian currency,” said the president at the Bogor Institute of Agriculture (IPB) yesterday. He has once submitted this idea at an international forum.

The root of the global financial crisis, he said, was an imbalance between advanced and developing countries in their capital, technology and natural resources. This is caused by a bubble economy which does not reflect the real sectors, but instead only reflects vast distribution of money, resulting in gaps.

On the other hand, Yudhoyono said Indonesia must strengthen its domestic source of funding system and reduce its foreign debts. One of the measures taken was by not joining the International Monetary Fund (IMF) as an effort to avoid a much bigger crisis. “Capital can come easily, but they can fly away as easily,” said Yudhoyono.

But according to Fauzi Ikhsan, Standard Chartered Bank senior economist, the chances for the single global currency to be implemented are slim, although it is theoretically applicable. “It is difficult to unify the countries of the world. It is just unrealistic for the time being,” Fauzi argued.

As example, he cited the euro, the single currency in Europe, which took more than 10 years to be applied. Even now, not all countries in the continent use it. One of them is the United Kingdom, which maintains its pound sterling because its value is far above the euro and the US dollar.

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