Abstract

‘Accumulations of large foreign exchange reserves by emerging economies such as China and Russia in the 2000s and the prospect for increased demand for precautionary reserves after the current global crisis have renewed interest in how international currencies emerge and how they can be replaced without disrupting the global economic system. The case of sterling in the post-war decades provides an opportunity to examine this process. Although a rapid global switch to the USD was widely predicted after 1945, the end of sterling’s reserve role was prolonged until the late 1970s by the structure of the international monetary system and collective global interest in its continuation so that the retirement of sterling as a reserve currency was achieved through negotiated management among the developed and developing world. This paper reviews the schemes that managed the decline and draws some implications for the dollar’s future.’

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http://www.gla.ac.uk/economicsocialhistory/ourstaff/catherineschenk/