There’s a saying – ‘money makes the world go round’. In many ways this is true. We need money to pay for goods and services, as well as to save and invest. There are many different currencies used by nations around the world. However, this begs the question, is there any country that doesn’t have money at all?
There is no country in the world that does not have money. Every country needs money so that people can buy goods and services, as well as to allow trade with other nations. However, although every country uses money, there are some nations that do not have their own currencies.
….but that’s just the start of it. In order to understand why every country uses money, but some countries don’t have their own currencies, we need to go into some more detail.
Why There Is No Country That Doesn’t Have Money?
So, it’s clear that there is no country in the world that doesn’t have money. But why is this? With all the differences between the nations of the world, why have all agreed that money is something they must have. Well, actually, there are three main reasons:
- Money is needed to exchange for goods
- People need money to purchase services they require
- A currency is vital for being part of the global economy
Now, we’ll briefly look at each of these…
Money Is Needed To Exchange For Goods
A first reason why every country in the world has money is because it is needed to pay for goods. Everybody has basic needs that must to be met, such as food, clothing and housing. In order to acquire these things, they need money to exchange for them. If a country did not have money, then people would need to exchange other items of value for things they needed. In the modern world this simply wouldn’t work, which is why every country has adopted a currency.
People Need Money To Purchase Services They Require
A second reason why there isn’t a country that doesn’t have money is because money is needed to procure services. As well as goods that people need, everyone also needs to use services. This can be anything from taking public transport to hiring a plumber. If a country didn’t have money, then people would have to exchange either goods or their own services when they needed something. This also wouldn’t be efficient, and so all countries have money.
A Currency Is Vital For Being Part Of The Global Economy
Another reason why there is not a country without money is because it is needed in order for a nation to be part of the global economy. Essentially, as every country in the world uses money to trade with each other, any country that didn’t have a currency would be locked out of the global trading system.
Why Do Some Countries Not Have Their Own Currency?
Right, so every country in the world uses money. However, as we’ve said, not every nation in the world has its own currency. But why would a country use a currency that is not theirs? Why do some countries not have their own currencies? Actually, there are three main reasons:
- A country has experienced a currency collapse
- A nation is part of an economic union
- To increase trade with larger nations
Let’s take a quick look at each of these in-turn…
A Country Has Experienced A Currency Collapse
A first reason why some countries don’t use their own currencies is because they experienced a currency collapse. If people lose faith in a currency, either due to economic meltdown or lack of financial backing from the state, the value of a currency collapses. Essentially, it can become worthless. One-way countries recover from this is by adopting a hard currency, such as the US dollar or the euro, as their currency.
A Nation Is Part Of An Economic Union
A second reason why some nations don’t have their own currencies is because they are in an economic union with other nations. Some economic partnerships, such as the European Union, the West African Economic and Monetary Union or the Economic Community of Central African States, have a shared currency among members. This is to boost trade and reduce friction between national economics within the bloc. Countries in these economic unions do not have their own currencies.
To Increase Trade With Larger Nations
A third reason why there are a few countries that don’t have their own currencies is because they want to boost trade with larger and more economically powerful neighbors. Sometimes a country having its own country disadvantages its businesses when exchanges are needed to trade with their largest trading partners. Adopting the currency of a large trading partners can help boost trade, and this is why some countries don’t have their own currencies.
Has There Ever Been A Country With No Currency?
Ok, so it’s clear in modern times there isn’t a country without a currency, but what about if we look back through history? Has there ever been nation in the past that didn’t use money at all?
Before money was invented, around the year 3,000 BC, there was no country or territory that had a currency. Before money was introduced, people would barter and trade goods and services directly with each other. However, for the last 500 years, essentially every country has had a currency.
The first known use of money was by the Mesopotamian people around 5,000 years ago. Before this, people would swap goods and services they needed.
It could be argued that up until probably the 14th Century, many places in the world didn’t use money. However, by the middle of the last millennium, especially as a result of European expansion and exploration, most places in the world used money. By the modern age, every nation in the world had adopted a currency.
Could There Be A Country Without Money?
Finally, now we understand that every country in the world uses money, and why, let’s think hypothetically – could there ever be a country today that operated without any currency at all?
In the modern world there could not be a country without money. Money is needed for people within a country to buy goods and services, and for a nation to trade with other countries. Although every country uses money, not every country has its own currency.
Some countries, such as Zimbabwe, Montenegro and El Salvador, have given up their currencies and adopted others such as the euro or dollar. However, there has never been a country that has given up using money all together. The fact that money is vital for people within a country to buy goods and services, and for people to do business domestically and internationally, means there could never be a country today that didn’t use money at all.