OPINION: Common currency: Pitfalls and prospects.

from BUSINESS LINE, October 26, 2009 The clamour to replace the dollar with a global common currency is fast growing. There are strong arguments that can be cited both in favour and against the concept of a global common currency. The problems arising out of the current regime of dollar supremacy are a subject of international concern. However, the move to a global common currency seems rather unviable. What it may at best lead to is the formation of new currency blocs.

CHALLENGING THE DOLLAR Since the mid 20th century, the dollar has been the de facto world currency. According to Global Political Economy: Understanding the International Economic Order (2001), by Robert Gilpin, 40-60 per cent of international financial transactions are denominated in dollars. For decades the dollar has been the world's principal reserve currency. In 1996, the dollar accounted for approximately two-thirds of the world's foreign exchange reserves. Further, many of the world's currencies are pegged against the dollar. Countries such as …