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A Theory of Currency Statecraft

A Theory of Currency Statecraft

(p.44) Three A Theory of Currency Statecraft
Currency Statecraft
Benjamin J. Cohen
University of Chicago Press

This chapter, the theoretical heart of the book, stresses the central importance of geopolitical ambition – its presence or absence – as a driving force in currency statecraft. Geopolitical ambition is a reflection of how a nation defines its proper place in the global order. The rudiments of a credible theory of currency statecraft are laid out in three key steps. First, the chapter shows that there is indeed policy space – practical opportunity for choice. Currency strategy in any given circumstance is not likely to be limited to just a single policy option dictated by economic logic. Human agency is implicit in the notion of statecraft. Second, the plausibility of geopolitical ambition as a legitimate causal variable is established by grounding the notion firmly within the more conventional concept of national identity, which is already quite familiar to students of IR and IPE as a driver of behavior. And third, the practical connection of the general concept of geopolitical ambition to the specific issue of currency internationalization is confirmed. Causal links between identity and money are not difficult to find.

Keywords:   currency statecraft, currency internationalization, national identity, geopolitical ambition, policy space, human agency

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