Question

Evaluate and explain ideal currency.

Answer 1

An ideal currency can be identified by the factors being:

1) Easy to exchange and stable on exchange rate - The currency for that particular country should not be affected by currency rate risks. This will enable it to be easily traded with exact calculations and projections for future. Another benefit would be that the country's economy would be more stable exposing less of financial and economical risks.

2) Independence over its own policies - The currency should be unaffected by policy change by other countries. The home country should monitor its own currency policies.

3) Acceptability - It should be accepted globally. This is essential because a currency may be perfectly running in its home country, without being affected by other countries, however, it needs to contribute to the growth of country's economy, and that can be done only once it is acceptable by other countries as well. Else, the currency fails in its purpose to become ideal.

4) Durable - Should be durable for longer periods, which means that running for a short period would not suffice its concept of being ideal. The duration should be long enough so that future projections can be made, and it should support the transactions which can be booked for a future date.

An ideal currency is something which is longed by a lot of countries, however almost next to impossible to achieve, as the economic state of each country is dependent on at least one of the other countries of the world, and hence they cannot mention that their currency is an ideal currency. One such cryptocurrency is Bitcoin, which is beyond the control of any specific legislature, however, it is yet to achieve any legal status.