You Asked:
Why don’t we have a universal currency? — Ian, Markham, Canada

Marshall Answered:
It is quite true that the world lacks a single currency. Instead there are dozens of national or regional currencies such as the U.S. dollar, the British pound, the Euro, the Japanese Yen, the Chinese Yuan, the Indian Rupee, the Russian Ruble and so on. And all these currencies have relative values that fluctuate every day, as shown on an exchange rate page like this one.

But that does not mean that there is not a universal currency. At least on planet earth, it would be possible to consider gold to be pretty close to a universal currency. It is very simple to use gold as a unit of monetary value that easily transfers to any currency in the world.

That’s not to say that Gold is perfect. Gold is a commodity whose value also rises and falls every day. But that does not change its universality. You can go to a web site like this one and get spot prices for gold at any moment. It’s also not to say that you couldn’t use other commodities, like copper or oil. It’s just that gold is dense (compared to oil and copper) and easier to trade. Gold is universal.

Still, it’s a good question: why can’t the people of the world settle on a single currency and get rid of all the others? We are definitely headed in that direction, and the Euro shows the way. The Euro eliminated a number of national currencies and greatly simplified trade across Europe in the process. The same thing might happen in South America. The reason why the process is so slow is the same reason why we do not have a universal language or a universal unit of measurement. We humans can’t even decide which side of the road to drive on. It has to do with history, national pride, familiarity, and most of all with whatever a person “grew up with”. When people “grow up with” a certain language or currency, many are loath to change in adulthood.