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Post by Quagmire region on Nov 8, 2005 20:46:26 GMT -5
Our region continues to grow. One of our strengths as a region is that our nations are diverse in terms of culture and scenery. Needless to say, tourists from our regional countries as well as from other regions have been flocking to various nations in the SNQ to experience our vibrant culture and majestic scenery. However, it has become a nightmare for banks and local businesses who have to deal with so many different currencies from different nations in our region.
Therefore, I am proposing that the SNQ should have a universal currency that will be accepted in all member states.
What do you guys think?
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Post by The Holy Empire of Roncelynia on Nov 9, 2005 2:02:12 GMT -5
All SNQ member states should be part of an economic and monetary union (EMU), whose purpose is to integrate the economies of SNQ countries more effectively. Integration promotes growth and prosperity. It requires closely coordinated economic policy. Member states decide jointly on the basis of proposals from the Commission on the broad approach they will each follow. They are then free to implement these guidelines using the tax and social welfare policy mix which best suits their country.
The single currency
Using the Universal Currency (UC) lowers the cost of cross-border business. Price comparability across borders increases competition. Individuals also benefit from this process; they make savings by not having to change money when traveling within the UC area, by being able to compare prices more readily, and because the cost of transferring money across borders has come down.
The UC will be a recognized international currency used by international travelers and for invoicing commercial transactions with countries outside the UC area, thus reducing risk for UC-area businesses. The UC can also be used by central banks worldwide as a reserve currency.
Adopting the Universal Currency
All EMU members are eligible to adopt the UC and all the countries who subsequently join the SNQ after the fact can adopt the UC within the next few years, though there is no fixed timetable. They may choose to wait if they think that their economies are not yet ready. They have to weigh the disadvantages (less control over their inflation, interest and exchange rates) against the likely benefits which include having the same currency as major trading partners, greater credibility in international financial markets and, consequently, greater flows of investment.
Citizens of all the new member states will be using the UC within a few years.
EMU members wanting to introduce the UC must meet certain economic criteria, including two years of exchange rate stability after joining. There are four other criteria. These relate to interest rates, the budget deficit, the inflation rate and the debt-to-GDP ratio. Compliance ensures that economies are on broadly similar paths when they join the UC area.
The Stability and Growth Pact
The disciplines of the Stability and Growth Pact (SGP) keep economic developments in the SNQ, and in the UC-area countries in particular, broadly synchronized. They prevent member states from taking policy measures which would unduly benefit their own economies at the expense of other SNQ countries.
A key principle of the Pact is the rule that all member states keep their budgets close to balance or in surplus. In a downturn, the deficit must generally not exceed 3% of gross domestic product (GDP). The second anchor of the Pact is the rule that the debt-to-GDP ratio should not be more than 60%.
A revision of the Pact introduced greater flexibility in exceeding the deficit threshold in hard economic times or where the reason for the higher deficit is investment in structural improvements to the economy. Member states are now also allowed longer times to reverse their excessive deficits. Ultimately, if they do not bring their economies back into line corrective measures or even fines can be imposed.
This revision did not change the level of the twin anchors and member states re-emphasized as part of the revision the importance of putting more money aside in the "good times" when budgets are close to or in surplus and reducing government debt to the threshold level.
The Quagmirean Court of Justice is the ultimate arbiter of how the Pact should be interpreted.
Tools for ensuring economic policy coherence
One of the Commission¡'s jobs is to assess whether each member state's economic policy is in line with the SNQ's agreed objectives - economic, social and environmental - and to provide early warnings if it believes a deficit is becoming abnormally high or that some other SGP rule is about to be breached.
The Commission has two tools for doing this:
- the Broad Economic Policy Guidelines (BEPG);
- the stability and convergence programs.
The BEPGs are a roadmap for the SNQ as a whole and for individual member states. They focus on the medium- and long-term changes needed to increase Quagmire's ability to create jobs and raise productivity growth through more effective competition and better conditions for investment, especially in knowledge and innovation.
Each year, member states provide the Commission with detailed information on their economic policies, and in particular the policies which underpin a disciplined approach to their budgets. Universal Currency-area countries provide this information in so-called stability programs. For other member states, it takes the form of convergence programs. The convergence programs contain one element which is not needed in the stability programs. This is information on how these economies are performing in relation to the criteria which would apply if they wanted to join the Universal Currency.
The role of the QCB
When the Universal Currency is launched, the Quagmirean Central Bank (QCB) will take over full responsibility for monetary policy throughout the UC area. This includes setting benchmark interest rates and managing the UC area's foreign exchange reserves. The QCB also has the job of ensuring that payments move smoothly across all SNQ borders, not just within the Universal Currency area.
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Post by bigmazy on Nov 9, 2005 6:28:20 GMT -5
Agree with all...
But,concerning "Adopting the Universal Currency" part...
What actions will be performed if a nation does not live up to the expectations?And IS a part of SNQ?Since it can not stay forever out of the system...
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Post by The Holy Empire of Roncelynia on Nov 9, 2005 13:20:53 GMT -5
Under the Stability and Growth Pact....
"Ultimately, if they do not bring their economies back into line corrective measures or even fines can be imposed."
These corrective measures and the details regarding fines have yet to be hammered out, but we can discuss these issues further before making any decisions about adopting the Universal Currency.
Perhaps higher tariffs or a trade embargo for a short period of time for that particular member state, until they have reached compliance with the rules and regulations that go along with adopting the Universal Currency, provided these measures do not exacerbate that nation's economic situation any further.
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Post by vitalinia on Nov 9, 2005 15:14:05 GMT -5
Quote from the Holy Empire of Roncelynia:
This is indeed an advantage when using a universal currency. It will allow the region to help stabilize member nations' economies and bring financial equality throughout all the regions. I further propose that the QCB has a Board of 12 Governors, with 6 of the governors being a delegate from each of the 6 founding nations of the SNQ. The Board of Governors will be overseen by the QCB Chairman, who shall be voted in by the governors themselves.
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Post by vitalinia on Nov 9, 2005 15:27:55 GMT -5
I forgot to add one more thing:
Although the QCB shall have powers over regional monetary policy, each sovereign nation shall be responsible for their respective nation's fiscal policy, thus preserving the virtue of state sovereignty, the founding belief of our region. Of course, each nation will have a responsibility to set fiscal policy in a way that will not have negative spillover effects to other member nations as agreed upon by the Stability and Growth Pact. Any nation responsible for any negative spillover effect shall be subject to fines, sanctions, or both until the issue is corrected.
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sondra
Master
Vitalina
Posts: 51
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Post by sondra on Nov 9, 2005 17:25:20 GMT -5
wow, roncelynia. just... wow.
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Ronnie
n00b
"Fear will keep the local systems in line. Fear of this battle station."
Posts: 2
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Post by Ronnie on Nov 10, 2005 3:56:02 GMT -5
Yeah...maybe I overdid it. lol =)
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Post by vitalinia on Nov 11, 2005 23:04:09 GMT -5
oh, i just remembered a question regarding the QCB. How would the QCB decide whether to raise or lower interest rates when some SNQ nations are hyperacting and others are stagnating? This could pose a problem if we decide to implement the QCB. It might be better if we just stick with the universal currency and leave the central banks to each sovereign nation.
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Post by The Holy Empire of Roncelynia on Nov 15, 2005 0:22:36 GMT -5
The QCB would have to make those decisions on a case-by-case basis. Remeber, the QCB's main role is to ensure price stability for the UC area as a whole. Some nations will have stronger economies than others at first, but the goal for this whole endeavor is economic equality for all.
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Ron
Master
Behold my rath and bow before me!
Posts: 55
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Post by Ron on Jan 19, 2006 11:45:03 GMT -5
Well isnt it against the SNQ Cinstitution to interfer with the iner workings of a Nation???
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Post by vitalinia on Jan 19, 2006 13:29:47 GMT -5
Yeah, actually it does. When the Constitution was passed I realized the illegality of this so I'm not planning on pressing through w/ this.
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Leviathan and Draculea
Guest
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Post by Leviathan and Draculea on Mar 17, 2006 1:39:27 GMT -5
Nope...universal currency is apocaliptically creepy. O.o
anyhoo individuality kicks butt, didnt you all perfer dealing with franks and pounds than euros... so "everyone love each other and be one and have one currency" *SMILE SMILE SMILE* LOOVVVEEEE!!! PUUPPIIEEESSSSS
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