Lecture 15 - The World Central Bank Does not exist Can we...

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The World Central Bank: Does not exist! Can we get one and what would problems associated with it be??? Current Situation: We live in a world of different currencies, and cause a need for exchange rates. The more stable exchange rates are, the more predictability stability in the markets, and the more likely investors will invest in that currency. There is an argument to go back to fixed rates, essentially a return to the gold standard. Most countries are not a fan of this, because it requires reserves of a something (dollars, gold, etc) in each country’s bank. Most countries have given up on fixed rates (Argentina, Malaysia and Thailand) have given up on fixed rates since their respective economic crashes Question: Why can’t we have 1 national currency? We live in a global economy! Roles of Country’s Central Banks: Issues Currency Sets Basic Interest Rates Sets Exchange Rates Tariffs and Tariff Barriers end 1 Problem is that if there is a WCB, then countries lose their sovereignty to establish interest rates.
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