I was having a discussion with a friend about the idea of competative currency. I generally like the idea, but my friend pointed out something apparently wrong with it. He asserted that a competitive currency system would create uneccessary complications in exchange. That in every exchange made, you would have to decide whether to use x currency or y currency. This, he says, would dramatically slow exchange and make it too complicated, citing international negotiations as an example. What would you say to my friend?
The market is nothing if not practical. If it would trully be too complicated then the market would come to use only one currency by itself anyways.
But no actually it wouldn`t be too complicated. Restaraunts are happy to take Visa as well as MasterCard. Amazon is happy to take PayPal as well as Moneybookers. And the international mafia is happy to take Swiss Frank as well as Euro (but not neccesarily Dollar). Don`t worry about the market, it is way ahead of us.
In fact, money started between commodities competing for its position as a medium of exchange. During 19th century, the most common commodities used as money were silver and gold. But then silver was being gradually replaced by gold.
If the different currencies were backed by gold or silver (as they almost certainly would be), then it wouldn't matter, so long as the weights were consistent (in g/kg). If I were to offer you an HSBC note for 100g of gold, would you reject this unless i paid you two 50g Barclay notes?
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community.
I think a currency exchange clearing house could solve most exchange problems especially since everything is digital now.
Thedesolateone: If the different currencies were backed by gold or silver (as they almost certainly would be), then it wouldn't matter, so long as the weights were consistent (in g/kg). If I were to offer you an HSBC note for 100g of gold, would you reject this unless i paid you two 50g Barclay notes?
I don't even think it would be that complicated with a debt card it could be set up so you choose the currency then the exchange rate is figured out and the proper amount is withdrawn from whatever denomination your account is in. Would not be very complicated and would be the simplest way of solving the problem.
Marko: Thedesolateone: If the different currencies were backed by gold or silver (as they almost certainly would be), then it wouldn't matter, so long as the weights were consistent (in g/kg). If I were to offer you an HSBC note for 100g of gold, would you reject this unless i paid you two 50g Barclay notes? And it is not just that. If for some reason a shopkeeper did not trust Barclay notes he would simply calculate that into the exchange rate. So he would accept the notes, but not at the rate shops around him accepted it. It would mean he would lose some buisiness from people who primarily used those notes, but if Barclay notes later took a nose dive his decision wold be vindicated. So in practice probably every conceivable note would be accepted.
Exactly - and apologies for the British-ness of my banks. Those could be Citibank or Bank of America or Credit Agricole or Zurich or Deutsche Bank notes.