Doctrinal Developments in International Money: The Question of Currency Internationalisation from Bretton-Woods to the 1970's

Abstract

In the Bretton-Woods era the controversy over cross-border use of national monies turned on how to create ‘symmetries’ and avoid significant ‘asymmetries’ in the way national currencies shared specific international currency functions. We examine the twentieth-century work of prominent economists on the nature, choice, and functions of international currencies. Prescriptive approaches to international currency formation are considered, beginning with the discussion of the Bretton-Woods plans, followed by doctrinal developments stimulated by the collapse of the Bretton-Woods system. Why are those developments instructive given recent revisitation of the currency internationalisation question in modern international monetary thought and policy? The modern revival of this question resembles a rehabilitation and restatement of earlier controversies though it underestimates the gradual encroachment of the idea of international currency competition. This idea came to dominate other doctrines from the 1970s; it accommodates the ongoing adaptation of national currencies to the full range of international currency functions.