Another Nail In The Currency Coffin

Two more countries join the mighty euro while the dollar slumps ever further into the shadows and the remnimbi looms scarily in the middle distance.

When will the world come to its senses and abolish currencies altogether?

Economists will say, oh, currencies are valuable because they are an indicator of a country's monetary health, and varying exchange rates are an expression of competition between states.

The euro-zone is the test of this proposition. So far, the dire prophesies of eurosceptics have not been fulfilled: Italy has not fallen out of the zone - all those lire under the bed are staying there; the discipline of centralized interest rates has had a salutary effect on weak-willed governments, previously addicted to the printing press.

The UK's Treasury will smirk, and say that its model of an independent monetary authority is proving superior. But Gordon Brown was lucky during a period of strength for the British economy. Now that debt is creeping up on his successor, who has lots of bills to pay and no obvious way of paying them, we will see who is right.

It's obvious that eventually there will be one global monetary authority, totally independent of governments and states, and one global currency, all roughly speaking on the model of the euro-zone.

But first there has to be a battle of the Titans between the emerging BRIC economies and the lazy, over-fed economies of Old Europe and Old America. BRIC will win, in currency terms, but by then the euro will have spread into another twenty countries, and its model will be adopted.