On the Trading of Currencies as
Commodities
The value of international currency is defined as the faith or
speculation that the value of currency will increase. When the Western European
countries maintained their own currency, usually indexing them to either a
solid material, such as gold or silver, or to other currencies, their central
banking policy was focused on domestic growth, as well as protecting against
inflation and deflation. The consolidation of the various European currencies
has resulted in the fate of one nation, such as France, becoming associated with
that of a much poorer nation, such as Bulgaria.
The recent economic
crisis, beginning in 2007 and continuing through 2010, has been at least
partially attributed to the values of currency. Jörg Bibow, in the article Europe’s Quest for Economic Stability, discusses key decision
points of the European Central Bank (ECB). Bibow, writing in 2006, explains
both strengths and weaknesses of the Eurozone banking model. The primary
objective of the ECB, according to its founding charter, is to maintain price
stability across the Eurozone.[1]
Price stability, Bibow states, is “essentially a piece of Bundesbank
nostalgia,” referring to the former German bank charged with maintaining price
parity, and coordinating the now defunct erratic European Monetary System, from
which the ECB’s framework is largely derived.[2]
As a matter of general policy, the ECB does not
attempt any other ends aside from their primary mandate, only fostering
interest in economic development and employment when the ECB views that
engaging these ends will not interfere with price stability.[3]
