Is a World Currency a Good Idea?

While a world currency may be a good idea in theory–it will eliminate the exchange rate risk–I don’t think that it is feasible because it seems cumbersome in nature.  For the entire world to have a single currency, there needs to be a central bank that will manage the global interest rates via operations similar to the tasks of the current Federal Reserve System.  There is a lot of pride in place here.  For a central bank (i.e. Federal Reserve, European Central Bank, etc.) to be “overrun” by a higher authority will almost be a slap in the face because of the pride that is at stake for each central bank system.  In addition, this concept could be viewed as a collective action problem.  Eliminating exchange rate risk would benefit the good of society, but each central bank system would look out for its own self-interest, which would mean ensuring that it doesn’t sacrifice its pride and authority.

Interesting article from the Washington Post

Tonight I spotted an article on the website for The Washington Post which had to do with the black market for organs.  The article shows that scarcity and strict government regulations for obtaining organs has led to a large black market for organs.  The article, “Organ Market” (http://www.washingtonpost.com/wp-dyn/content/article/2007/04/13/AR2007041302066.html) discusses that the black market thrives because of the excess of organ demands.  According to the author, the only way to put an end to the black market is to simply flood the market with organs in order to drive down the price for organs, which would make the exchange of organs much less appealing because of the higher transaction costs relative to its profitability.  I found this article to be interesting since my group will be discussing black markets as it relates to exchange rates.