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(p.132) Six Decline
Currency Statecraft
Benjamin J. Cohen
University of Chicago Press

After maturity comes decline – the end that history suggests must come to every international currency. At this stage, the challenge is how best to live with fading eminence. Again the choices are three: resistance, reinforcement, or relaxation. Policy makers may actively strive to resist abandonment of their currency, hoping to preserve at least some of the benefits of international use. They can seek to reinforce the process of decline in hopes of managing a “soft landing” for the currency. Or they may just leave it to market actors and foreign central banks to decide matters. The prime example of currency decline in recent history is Britain’s pound sterling, which over the last century has fallen a long way from its once exalted status at the peak of the global monetary hierarchy. Once more, the importance of geopolitical ambition is highlighted. To cope with the challenge of decline, London’s currency statecraft gradually evolved from resistance to reinforcement. After struggling mightily to sustain a role for the pound to commensurate with Britain’s historical role as a great imperial power, strategy eventually moved decisively from opposition to accommodation, once British policy elites began to accept their nation’s diminished place in the world.

Keywords:   international currency, currency statecraft, monetary hierarchy, geopolitical ambition, Britain, pound sterling, yen

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