Why is the currency of trade important?

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For example: Why does it matter that a trade happens in USD instead of euro? They all can be made equivalent right?

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Anonymous 0 Comments

Because different currency inflate at different rates. Looking at the US we have a reported rate of 8% currently. This means you have 8% less buying power. If you look at turkey they had a 50% inflation rate last time I checked.

If you were to unify things like they did with the euro this causes other problems. Places that make more or have more natural resources will be able to earn more and leave others with less. Germany thrived under the euro while Greece struggled.

Inefficiency in markets can be a good thing and help distribute wealth.

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