Regional Currency Unions and Supranational Currency

Abstract

Creation of voluntary regional economic alliances of independent countries was an important area of development of the regional and world economy at the end of XX-th century. They arise as a reaction on the dominance of the world’s few national currencies, playing a world level role. A basic feature characterizes trade relations in the framework of such alliances — a departure from the world’s currencies and the use of specially created regional ones. Practically the main obstacle to the emergence and spread of such unions is instability of regional currencies associated with their binding to one of the national currencies of the country — a member of the Union or to the gold standard. The article describes the theoretical solution and practical mechanism for creating independent of any national currency or gold, a supranational currency. The purchasing power of such a currency is determined by a specially created benchmark of purchasing power. It is demonstrated that the currency of this type allows using regional currencies without discrimination of member countries of the regional union. Also, there are given arguments about the prospect of using such currencies as the world’s.