Over the past month, world economic leaders have begun calling for a new world currency to replace the dollar. The world financial crisis has led to worries about the stability of the dollar, which, in turn, has led other countries to feel the need for a new world reserve currency.
For decades, the dollar has been the standard international currency. Many governments maintain a large reserve of dollars as part of their treasuries, such as the $1 trillion in US government debt and securities held by China. International commodities such as crude oil are bought and sold in dollars and international business is typically conducted in dollars.
President Obama’s attempts to stimulate the economy are leading to massive increases in government spending and federal deficits. Creditor nations such as China worry that the ballooning federal debt will lead to inflation and a devalued dollar, which would have almost the same effect on foreign creditors as if the US defaulted on its debt.
In late March, a United Nations panel released a report which recommended that the world create a new reserve currency based on a hard traded, basket of currencies similar to the old European currency unit (Ecu) or an accounting unit called the Special Drawing Right (SDR). The Ecu and the SDR are weighted combinations of currencies that can be traded in financial markets. The Euro had a similar start as a combination of European currencies.
Prior to the April G20 economic summit, both Russia and China indicated their support for world reserve currency. Arkady Dvorkovich, a Kremlin economic advisor, said that Russia would call for discussions of a “supra-national reserve currency.”
Zhou Xiaochuan, governor of China’s central bank, wrote that a new currency would help “to achieve the objective of safeguarding global economic and financial stability.” He worries that there are “inherent vulnerabilities and systemic risks in the existing international monetary system” based on the dollar. He would like the new currency to be used for international trade, commodities pricing, and accounting, unlike current SDRs, which are only used for government finance.
At one point, US Treasury Secretary appeared to agree with the Chinese proposal, saying, “We’re actually quite open to that.”
Within ten minutes of Geithner’s comment, the value of the dollar started to drop sharply. The Secretary quickly recanted his statement and noted that he had not actually read the Chinese proposal.
President Obama, Secretary Geithner, and Federal Reserve Chairman Ben Bernanke all downplayed the proposals for a new currency. “I don’t believe there is a need for a global currency,” President Obama said. He added “the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world.”
Nevertheless, just a few days later, the G20 did decide to create $250 billion in special drawing rights for the International Monetary Fund (IMF) in what the international financial press described as a “surprising” move. The SDR is an accounting tool used by governments and is not a currency itself, but is made up of a basket of values of four currencies: the dollar, the euro, the British pound sterling, and the Japanese yen. The SDRs would be allocated to governments based on their contributions to the IMF for lending to poorer countries. In essence, SDRs are a form of foreign aid in which wealthy nations borrow to loan money to poor nations.
While the creation of the SDRs is not the creation of a worldwide currency, it seems to be a step toward a global economic system, especially in light of the recent Russian and Chinese proposals. It is also similar to the creation of the euro. The European Community had its roots in the 1951 Treaty of Paris between Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands that created the European Coal and Steel Community. In 1957, the Treaty of Rome between the same nations expanded that cooperation to create the European Economic Community.
It wasn’t until 1979 that the European nations took the next step toward creating a common currency. That year the European Monetary System was created, and, with it, the Ecu, a common currency unit similar to the new SDR.
In 1986, the Single European Act extended the jurisdiction of the European Community to monetary policy. In 1992, the Treaty of Maastricht created the European Union and set a deadline of January 1999 to establish a common currency, as well as a single monetary and economic policy.
In January 1999, the European Union, by then eleven nations, pegged their exchange rates to the euro. At the same time, the euro began to be used for non-cash transactions and accounting. The euro was also used in stock markets and was used on bank statements and corporate bond offerings.
Three years later, in January 2002, the euro went into circulation. A few months later, the old national currencies were phased out.
The creation of the euro was a gradual process that took fifty years. The new Russian and Chinese proposals go beyond the creation of Special Drawing Rights, and may very well eventually lead to the creation of a worldwide version of the euro. There is a possibility that the world financial crisis will accelerate the timetable for the creation of this world currency, especially if the dollar becomes unstable under staggering mountains of US federal debt.
Until recently, the idea of a world currency has been the province of conspiracy theorists and Bible prophecy scholars. It is somewhat shocking to find the idea meeting with widespread acceptance from world leaders.
For many years, theologians have believed that the Biblical Book of Revelation has held an implicit prophecy of a single world currency. Revelation 13:16-17 says “He also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead, so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name.”
The implication here is that the latter day world ruler, the beast or Antichrist, has total control over the world economy and financial system. Scholars believe that, at that point, the entire world economy will be tied together with a single cashless currency system. Using the system requires a mark of loyalty that, when applied to the right hand or forehead, is easily visible.
One possibility, explored in Tim LaHaye’s Left Behind series, is that when the mark is applied, a RFID (radio frequency identification) chip is implanted under the skin. This chip would be tied to the user’s bank and financial accounts, so that when a purchase is made, the transaction would be completed by simply scanning the buyer’s hand or face. Essentially, it would be like having a debit card in your body.
Interestingly, this technology is already available. In 2003, Applied Digital Solutions (now called Digital Angel) announced the development of a system called VeriPay, which used microchips half the size of a grain of sand to identify consumers to ATM machines in lieu of an ATM or debit card. The technology did not catch on, but the company changed its focus to market biochips to pet owners. A chip with an identification number is implanted between the pet’s shoulders. If the animal is found, the chip is scanned and the owner’s information is retrieved from a database. The chips have already been implanted into some humans as well.
A cashless economy based on electronic funds transfers would enable a world leader to exercise unprecedented control over world finances. Without cash, it would be impossible for an underground “black” market to thrive. Similarly, dissidents could find themselves with no access to their financial accounts.
The greater danger for those who participate in the beast’s economy is the loss of their souls. Revelation further indicates (20:4, 11-15) that those who take the beast’s mark, showing allegiance to the Antichrist, will be judged and cast into the lake of fire. The only way to escape this fate is accept Jesus Christ as Lord and believe that He rose from the dead (Romans 10:9).
The creation of a single world currency is most likely still a long way off. Recent events show that many world leaders would like to move in that direction, however. These steps are yet another positive indication that the Bible accurately foretells the future and that it is a reliable source of information from God. We can be assured that its prophecies of the return of Jesus are not only accurate; they are drawing nearer.
NOTE: This may seem like a strange topic for an Easter blog, but if Jesus was able to rise from the dead, then it follows that He will be able to return as He said He would. The signs that He gave to signify His return bear a striking resemblance to today's headlines.
Jesus is risen indeed.