Currency StatecraftMonetary Rivalry and Geopolitical Ambition

Currency StatecraftMonetary Rivalry and Geopolitical Ambition

Benjamin J. Cohen

Print publication date: 2019

ISBN: 9780226587691

Publisher: University of Chicago Press

Abstract

What is the role of currency statecraft in world politics? When a national money gains international appeal, the power resources of the issuing country are augmented. Currency statecraft is about what the country chooses to do – or not do – with its currency power. This book begins with the premise that every international money goes through a life cycle, from youth to maturity to (eventually) decline. At each stage, the supplier has three choices: to be pro-active in favor of international use, to resist internationalization, or to remain neutral. The central argument of the book is that beyond purely material factors, currency statecraft is motivated by cognitive considerations having to do with a society’s underlying sense of identity. In particular, policy is shaped by the extent of a state’s geopolitical ambition: how driven it is to build or sustain a prominent place in the community of nations. Extensive study of experience in the modern era demonstrates the key role played by the presence or absence of geopolitical ambition in the rise of international currencies like the West German Deutsche mark or Japanese yen, the long-standing dominance of the US dollar, and the decline of the British pound. The book concludes with a look at the growing rivalry between America’s greenback and the emergent renminbi of China – the central drama on the world currency stage today. Analysis suggests that a new era of open and costly monetary hostilities may be approaching.