Common Currency

[Suba]

A common currency is a medium of exchange used by a group of countries within a monetary union, intended to replace the national currencies of each member country. This facilitates international transactions, improves monetary control for each member, and promotes economic stability, lowers trade transaction costs between member countries, and serves as a diversification tool to reduce dependence on the USD. I believe a common currency will struggle to replace the USD as a reserve currency. Some common currencies I am familiar with include:

The Euro (€, EUR) is the official currency used as a medium of exchange in 20 European countries.

BRICS is a blockchain-based digital payment system adopted by South Africa, Brazil, China, India, and Russia. The BRICS currency is not yet officially recognized and therefore not traded on the forex market.

Local Currency Transactions (LCT) are a payment mechanism between member countries using local currency without first having to convert it to USD. Currently, LCT has been adopted by countries such as Japan, China, Thailand, Malaysia, Singapore, the Philippines, and Indonesia. The central banks of each member country have collaborated through Appointed Cross Currency Dealer (ACCD) banks which function to exchange/convert every transaction of each country's national currency.

 

[Min George]

I don't know how Europe did it that many countries in the zone are happy using Euros as part of their financial currency.

 

[SilverLance]

LCT is a practical step toward reducing dollar dependence, even without a full common currency.