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Perhaps a dumb question: why does every little country need its own currency? Are they all just addicted to printing money? Ignoring the volatility and environ

• chii 4y ago
  and so who controls that crypto? The biggest country of the group? Or the wealthiest? What happens if one of the countries needs to print some money to get out of a bind? What happens if external countries don't want to receive the crypto in exchange for imports/exports? I dont think crypto makes any of the above any better than an existing currency owned by the fiat banking system.
• digianarchist 4y ago
  Only rich countries can afford to peg their currencies.
  • likecarter 4y ago
    Even then, not a good idea for them, hence very few rich countries do it (unless they are very small). Controlling interest rates is incredibly important, especially in times of crisis. If you were pegged to the USD right now (which is skyrocketing relative to most other currencies), you would be in trouble.
  • imtringued 4y ago
    You can peg your currency down but you can't peg it up without external energy i.e. debt.
• mpyne 4y ago
  > why does every little country need its own currency? Are they all just addicted to printing money? Controlling your money supply can be needed to improve your country's position with regard to foreign trade. Greece would probably have been better able to manage its recent debt crisis had it controlled its own currency rather than being tied to the Euro, for example. > Ignoring the volatility and environmental concerns, why shouldn’t all these small to medium-sized countries standardize on a cryptocurrency? Because people still need to be able to transact with something, which is not a function well-served by cryptocurrencies, most of which have the bulk of trade in them carried on off-chain or via stablecoins that track a fiat currency.
  • rlt 4y ago
    > Because people still need to be able to transact with something, which is not a function well-served by cryptocurrencies, most of which have the bulk of trade in them carried on off-chain or via stablecoins that track a fiat currency. That’s a bit like saying the dollar isn’t a suitable currency because most transactions don’t happen directly through the Federal Reserve. Most people would transact through “layer 2” systems like Lightning, or even paper currency issued by one or more countries but backed by cryptocurrency reserves. The cryptocurrency bit is to allow mutually distrusting countries to standardize on a single currency, if that’s something that might be valuable.
  • olalonde 4y ago
    > Controlling your money supply can be needed to improve your country's position with regard to foreign trade. This is basically protectionism, an economic theory that has been debunked time after time. If it were true, then why doesn't it hold true for individual states within a country? And while we are at it, why not a currency for every city or neighborhood? > Because people still need to be able to transact with something, which is not a function well-served by cryptocurrencies, most of which have the bulk of trade in them carried on off-chain or via stablecoins that track a fiat currency. Those same systems could simply add support for cryptocurrency. Paypal did a few months ago (not sure if they enabled merchant support or p2p transfers, but there's no technical barrier preventing them to do so). Credit cards could also add crypto to the long list of currencies they already support. Etc.
• likecarter 4y ago
  The whole purpose of fiat currency is so the central bank can literally dictate interest rates and "print money" in times of crisis. Pegging currencies to the USD has been tried and usually fails.
  • olalonde 4y ago
    > Pegging currencies to the USD has been tried and usually fails. Do you have a source to back that up? I can think of many countries where it was done successfully (e.g. Hong Kong, UAE, Panama, etc.).
• andrewmutz 4y ago
  Most countries are better off with a money supply that can adapt to local economic conditions (local unemployment and inflation). Having a fixed currency prevents that. During economic crises, it is critical to be able to increase the money supply. Also, most countries end up managing their currency reasonably well (better than having a fixed money supply). Sri Lanka is in the news for failing, but most nations are quietly doing reasonably well.
• socialdemocrat 4y ago
  Having your own currency is what lets you adjust the exchange between your country and another one. You should never use a currency you don’t control or cannot influence in any way. That sets you up for disaster.
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• 8note 4y ago
  Fiat lets your currency grow with your economy. Lots of deflation or inflation has bad effects by influencing how people spend.
• roody15 4y ago
  Sri Lanka doesn’t have a currency problem. There population doubled since 1960 and they never industrialized. They simply don’t make anything to sell that has value other than tourism and natural resources. Trade imbalance has been an issue for decades and they simply hid the problem by taking out loans. They have simply run out of credit. My two cents
  • zzleeper 4y ago
    But it's not just that. With a free economy the problem would sort-of have solved itself, as there are a lot of poorer countries that don't have currency crises. To get as screwed up as this you can only achieve with centralized planning, where a single decisionmaker mistake can mess up the sustenance of millions.
    • imtringued 4y ago
      What? Japan, South Korea and China are examples of planned industrialization.
  • nibbleshifter 4y ago
    Hard to industrialise when you are busy fighting a war on your own soil tbh. Good chunks of the North are still somewhat off limits and fucking littered with landmines too.
• imtringued 4y ago
  >Perhaps a dumb question: why does every little country need its own currency? Are they all just addicted to printing money? Because money has a liquidity premium that allows you to disregard location, to make money less liquid you have to bind it to a national economy, otherwise buyers might decide to only import products from a handful countries. Look at Greece they run a trade deficit because German products are cheaper, this means Greek debt is impossible to unwind until Germany starts importing from Greece.
• pjc50 4y ago
  Quite a lot of the smaller countries just use the US dollar.
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