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 Editorials | Opinions | May 2008 
What Should Be a Definition for a Millionaire?
 Ivan Simic - PVNN
Millionaires, millionaires, day after day we watch and read about millionaires; actor millionaires, singer millionaires, heiress millionaires and others. Every day number of millionaires in the world is rising with incredible speed. This "millionaire" phenomenon became very important in global society, in fact, sometimes millionaires and billionaires are front news before domestic or global issues. In relation, large number of companies, news papers and TV stations are conducting detailed researches on their treasured assets.
But, are they all really millionaires?
A Millionaire, according to encyclopaedia is an individual who resides in a household whose net worth or wealth exceeds one million units of any currency. However, it can also be a person who owns one million units of any currency in cash, bank account or savings account.
The world faced rapid development of global economy from 19th century to today. It came to the point when being a millionaire is not prestige like it was before. Now, there are plenty of millionaires and billionaires around the globe, and because of that they needed a new expression for themselves in order to make a distinction between each others.
As a result, today we have: multimillionaires (net worth of two or more millions), hectomillionaires (net worth of hundred and more millions) and billionaires (net worth of one or more billions). In the past ten years with enormous growth of hectomillionaires and billionaires, millionaires or multimillionaires who have few millions are considered middle-class millionaires; in the contemporary word; they are just not super-rich.
Looking at this report, the World Wealth Report 2007 (the report on individuals with a net worth of at least US$1 million in all assets except their primary residence) - Annual World Wealth Report from Merrill Lynch compiled by Capgemini, we can see that the World's High Net Worth (HNW) population grew to 9.5 million with their assets raised to US$37.2 trillion". Also, Merrill Lynch reports that there are 9.5 million (HNWI) millionaires worldwide, and 95.000 multimillionaires (UHNWI with over US$30 million). In 2007, Forbes Magazine reported that there are 946 billionaires in the world with total accumulated wealth of US$3.5 trillion.
Looking at the private banking, a High Net Worth Individual (HNWI) is a person with a high net worth of US$1 million and plus in investible assets (not including primary assets). An Ultra High Net Worth Individual or Individuals (UHNWI) refers to individuals or families who have at least US$30 million in investible assets.
Therefore, according to definition a millionaire is an individual who owns one million units of any currency. According to private banking a millionaire is a person who owns one million of the US Dollars. However, individuals who have EU€800,000.00 are not counted as millionaires in their country, nobody, including beneficiary bank does not recognize these individuals as millionaires, but if we exchange this amount for the US Dollars, these individuals are becoming millionaires.
So, can this report on the number of the world's millionaires be true?
There is no definition or internationally recognized model for the US Dollar being currency for indentifying (counting) the world's or individuals wealth. Yes, the United States Dollar (USD) has been "de facto" world currency since 20th century, and as of 2007 dollar still has the largest share at 63.3% of foreign reserve holdings; the Euro has some 26.5%.
However, since the year 2000, the Dollar share is falling and the Euro share is rising. As of December 2006, the Euro surpassed the Dollar in the combined value of cash in circulation. The value of the Euro notes in circulation has risen to more than EU€610 billion, equivalent to US$800 billion; therefore, the Euro became the currency with the highest combined value of cash in circulation in the world.
One million of the US Dollars exchanged in other currencies do not always make millionaires. For example: the US$1million on 23 May 2008 at the exchange rate is equivalent to: EU€634,698.99 (Euros), UK £505,114.98 (Pounds), KWD265,450.01 (Kuwait Dinar).
Looking at the above example we can see that a Kuwait Dinar (KWD) is the strongest currency unit, in fact the KWD is the world's highest valued currency unit, and from May 20, 2007 the KWD was re-pegged to a basket of currencies. Yet, a Kuwaiti dinar is not so called "hard currency", is not of very much use outside Kuwait, and is bound to the economy of that country.
On the other hand, the UK Pound and the EU Euro are hard currencies. They are reserve currencies, and currencies with a good buying power which are widely accepted as a reliable store of value. But, we don't see them as a model for counting world wealth.
The US Dollar (USD) is not strongest currency unit, especially not now; even the Cuban Convertible Paso (CUC) and the Azerbaijan Manat (AZN) are stronger than the USD. Therefore, using the USD as the currency unit or a model for identifying millionaires is giving the wrong picture of who is being a millionaire in the world.
It is very simple: companies, that conduct researches and others, should conduct their researches based upon highest valued currency, if not the KWD, then the EU Euro or the UK Pound , still the higher currencies are the higher ones.
Consequently, what should be a definition for a millionaire?
Perhaps: A millionaire is an individual whose net worth of wealth exceeds a sufficient amount of units of any currency when exchanged worth one million units of the world's highest valued currency unit, or the world's highest anchor currency unit. It can also be a person who owns enough units of any currency when exchanged worth one million units of the world's highest valued currency unit, or the world's highest anchor currency unit in cash, bank accounts and savings.
If one person has enough currencies to buy one million of the world's highest valued currency unit, or the world's highest anchor currency unit, than that person should be counted as a millionaire. This way we will only have around hundred billionaires and much less millionaires, and that will make some sense and bring back original meaning of being a millionaire and a billionaire.
Ivan Simic writes from Belgrade, Serbia |
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