It assumed that the fiscal markets, especially foreign exchange, would be most affected and that too directly following the introduction of a Eurodollar - the proposed single currency for Europe and the United States. Though it may seem incredible, the monetary markets actually witness foreign exchange transactions worth $1 trillion daily. Following the introduction of a Eurodollar, the number of foreign exchange transactions in the futures market, the swap market, the forward market and the spot market would witness a drastic fall. In addition, there would be no requirement for any money hedging between Europe and the United States. In fact, this practice will be done away with immediately when the Eurodollar is introduced. There is no need to mention the when a single currency or a Eurodollar is introduced for use in Europe as well as in the United States it would instantly prove to be the main as well as the most powerful money across the globe and may perhaps also be the solitary reserve currency worldwide.
The setting up of an international central bank, which may be known as the Global Reserve Bank (GRB), would be one of the major necessities for introducing a single currency - a Eurodollar - for the United States and Europe. It is believed that the proposed Global Reserve Bank will be set up on the lines of the Federal Reserve Bank of the United States. In addition, it may be assumed that with a view to connect well with the central banks of the different member nations of the currency union, the proposed Global Reserve Bank will be structured on the basis on the central banks operating in those countries.
The functioning of the Federal Reserve or the Fed is something like as follows. The fiscal policy is centralized at the Federal Open Market Committee (FOMC), while the Federal Reserve Bank of New York executes the policies formulated by the FOMC. Here it may be assumed that during the establishment of the Global Reserve Bank, it could also have a wing like the FOMC comprising 12 members. While six of these members, including the chairman, would be appointed directly by the Global Reserve Bank, of the remaining six members, three may comprise of representatives from the district banks in the United States, one of whom may preferably be from New York. The other three members of the proposed committee may be incorporated from the different central banks of the European nations. As the member nations of the European currency union rotate their representatives presently, they may adopt the same policy in the proposed Global Reserve Bank's equivalent of the FOMC.
Apart from administering the fiscal policy, the Federal Reserve Bank in the United States also performs a vital function in controlling the banking system in that country. In the Fed, the Comptroller of the Currency takes on the national banks, while the Federal Deposit Insurance Corporation (FDIC) offers insurances on the deposits made by clients. This insurance is endorsed by the complete acknowledgement and confidence of the Government of the United States and the role of the Fed is to oversee the functioning of the banks. When a Global Reserve Bank is established, member nations would be required to ensure common yardsticks to monitor the functioning of the banks that are prevalent in the United States now. In fact, even the rules regarding the banking system in Europe and the United States need to be redrafted in both the regions with a view to synchronize one with another. In addition, it would be essential to apply the global book-keeping and simplicity yardsticks for all the nations that would be members of the Eurodollar currency union.
Later on, the regulations would also be applicable for any other nation that desires to join the Eurodollar community. Like in the instance of Argentina linking its currency with the US dollar, nations that are not members of the Eurodollar bloc, but would desire to use the same common currency, may still associate their currency to this single currency for the United States and Europe would be required to consent to the governing principle that may be prevailing in the European nations and the United States.
It is presumed that the introduction of a Eurodollar would result in the worldwide acceptance of the fiscal market, especially in the banking sector, and this globalization impact would eventually spread to the stock as well as the futures markets. In fact, the global stock markets would be even more accommodative as the common currency or the proposed Eurodollar would enable people to buy and sell stocks at different stock exchanges worldwide. The introduction of a Eurodollar would enable business corporations that were thus far involved in making an initial public offering (IPO) of a secondary offering would then be able to offer shares the European nations as well as the United States providing them with a greater resource base to obtain funds.
It may be said with certainty that the introduction of a single currency for Europe and the United States, the proposed Eurodollar, would offer huge savings to both individuals as well as the businesses. The benefits would occur in relation to pursuing global financial transactions and also in decreasing the risks that may be associated with the foreign exchange rates. In effect, the multinational business houses would immediately witness almost getting rid of the international business hazards, financial perils as well as conversion problems.
It is needless to mention that the foreign money markets are quite high-priced. In effect, the governments of different nations compel the multinational business houses to pay out several billion dollars every year coping with the effects of functioning with as many as 200 different monies across the globe. Thus, it may be safely concluded that the launch of a common or single currency for Europe and the United States would be extremely advantageous for individuals as well as business firms to lessen their expenditures in this regard.
