Exchange Rate and World Currency

Fengquan Liu


This paper explores the derivation of exchange rate and the way of world currency issuing, and some findings are captured as: the world’s currency demand is equal to the global export increment, and that every nation’s world currency needs should equal to their own export increment. Currently, there are issues with the existing world currency system, which many countries or regions call for change. Because all the existing proposals in the field have their constraints, so this paper suggests that the world central bank issuing a global currency with which each country would take its own share and maintain that the world currency supply to be equal to the global export increments. This will be more sustainable for international business and this theory of world currency does have advantage over existing systems.

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