What do you think?
Rate this book
How Global Currencies Work: Past, Present, and Future
A powerful new understanding of global currency trends, including the rise of the Chinese yuan
At first glance, the modern history of the global economic system seems to support the long-held view that the leading world power's currency--the British pound, the U.S. dollar, and perhaps someday the Chinese yuan--invariably dominates international trade and finance. In How Global Currencies Work, three noted economists provide a reassessment of this history and the theories behind the conventional wisdom.
Offering a new history of global finance over the past two centuries, and marshaling extensive new data to test established theories of how global currencies work, Barry Eichengreen, Arnaud Mehl, and Livia Chiţu argue for a new view, in which several national monies can share international currency status, and their importance can change rapidly. They demonstrate how changes in technology and in the structure of international trade and finance have reshaped the landscape of international currencies so that several international financial standards can coexist. They show that multiple international and reserve currencies have in fact coexisted in the past--upending the traditional view of the British pound's dominance prior to 1945 and the U.S. dollar's dominance more recently.
Looking forward, the book tackles the implications of this new framework for major questions facing the future of the international monetary system, from whether the euro and the Chinese yuan might address their respective challenges and perhaps rival the dollar, to how increased currency competition might affect global financial stability.
At first glance, the modern history of the global economic system seems to support the long-held view that the leading world power's currency--the British pound, the U.S. dollar, and perhaps someday the Chinese yuan--invariably dominates international trade and finance. In How Global Currencies Work, three noted economists provide a reassessment of this history and the theories behind the conventional wisdom.
Offering a new history of global finance over the past two centuries, and marshaling extensive new data to test established theories of how global currencies work, Barry Eichengreen, Arnaud Mehl, and Livia Chiţu argue for a new view, in which several national monies can share international currency status, and their importance can change rapidly. They demonstrate how changes in technology and in the structure of international trade and finance have reshaped the landscape of international currencies so that several international financial standards can coexist. They show that multiple international and reserve currencies have in fact coexisted in the past--upending the traditional view of the British pound's dominance prior to 1945 and the U.S. dollar's dominance more recently.
Looking forward, the book tackles the implications of this new framework for major questions facing the future of the international monetary system, from whether the euro and the Chinese yuan might address their respective challenges and perhaps rival the dollar, to how increased currency competition might affect global financial stability.
272 pages, Hardcover
First published October 23, 2017
70 people are currently reading
420 people want to read
About the author
Barry Eichengreen
107 books141 followersBarry Eichengreen* is the George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he has taught since 1987. He is a Research Associate of the National Bureau of Economic Research (Cambridge, Massachusetts) and Research Fellow of the Centre for Economic Policy Research (London, England). In 1997-98 he was Senior Policy Advisor at the International Monetary Fund. He is a fellow of the American Academy of Arts and Sciences (class of 1997).
Professor Eichengreen is the convener of the Bellagio Group of academics and economic officials and chair of the Academic Advisory Committee of the Peterson Institute of International Economics. He has held Guggenheim and Fulbright Fellowships and has been a fellow of the Center for Advanced Study in the Behavioral Sciences (Palo Alto) and the Institute for Advanced Study (Berlin). He is a regular monthly columnist for Project Syndicate.
His most recent books are Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (January 2011)(shortlisted for the Financial Times and Goldman Sachs Business Book of the Year Award in 2011), Emerging Giants: China and India in the World Economy, co-edited with Poonam Gupta and Ranjiv Kumar (2010), Labor in the Era of Globalization, co-edited with Clair Brown and Michael Reich (2009), Institutions for Regionalism: Enhancing Asia's Economic Cooperation and Integration, coedited with Jong-Wha Lee (2009), and Fostering Monetary & Financial Cooperation in East Asia, co-edited with Duck-Koo Chung (2009). Other books include Globalizing Capital: A History of the International Monetary System, Second Edition (2008), The European Economy since 1945: Coordinated Capitalism and Beyond (updated paperback edition, 2008), Bond Markets in Latin America: On the Verge of a Big Bang?, co-edited with Eduardo Borensztein, Kevin Cowan, and Ugo Panizza (2008), and China, Asia, and the New World Economy, co-edited with Charles Wyplosz and Yung Chul Park (2008).
Professor Eichengreen was awarded the Economic History Association's Jonathan R.T. Hughes Prize for Excellence in Teaching in 2002 and the University of California at Berkeley Social Science Division's Distinguished Teaching Award in 2004. He is the recipient of a doctor honoris causa from the American University in Paris, and the 2010 recipient of the Schumpeter Prize from the International Schumpeter Society. He was named one of Foreign Policy Magazine 's 100 Leading Global Thinkers in 2011. He is Immediate Past President of the Economic History Association (2010-11 academic year).
* This is the biosketch available at his faculty page.
Professor Eichengreen is the convener of the Bellagio Group of academics and economic officials and chair of the Academic Advisory Committee of the Peterson Institute of International Economics. He has held Guggenheim and Fulbright Fellowships and has been a fellow of the Center for Advanced Study in the Behavioral Sciences (Palo Alto) and the Institute for Advanced Study (Berlin). He is a regular monthly columnist for Project Syndicate.
His most recent books are Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (January 2011)(shortlisted for the Financial Times and Goldman Sachs Business Book of the Year Award in 2011), Emerging Giants: China and India in the World Economy, co-edited with Poonam Gupta and Ranjiv Kumar (2010), Labor in the Era of Globalization, co-edited with Clair Brown and Michael Reich (2009), Institutions for Regionalism: Enhancing Asia's Economic Cooperation and Integration, coedited with Jong-Wha Lee (2009), and Fostering Monetary & Financial Cooperation in East Asia, co-edited with Duck-Koo Chung (2009). Other books include Globalizing Capital: A History of the International Monetary System, Second Edition (2008), The European Economy since 1945: Coordinated Capitalism and Beyond (updated paperback edition, 2008), Bond Markets in Latin America: On the Verge of a Big Bang?, co-edited with Eduardo Borensztein, Kevin Cowan, and Ugo Panizza (2008), and China, Asia, and the New World Economy, co-edited with Charles Wyplosz and Yung Chul Park (2008).
Professor Eichengreen was awarded the Economic History Association's Jonathan R.T. Hughes Prize for Excellence in Teaching in 2002 and the University of California at Berkeley Social Science Division's Distinguished Teaching Award in 2004. He is the recipient of a doctor honoris causa from the American University in Paris, and the 2010 recipient of the Schumpeter Prize from the International Schumpeter Society. He was named one of Foreign Policy Magazine 's 100 Leading Global Thinkers in 2011. He is Immediate Past President of the Economic History Association (2010-11 academic year).
* This is the biosketch available at his faculty page.
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 13 of 13 reviews
Want to read
December 12, 2017The dollar’s days as the world’s most important currency are numbered
in:
https://qz.com/1150533/the-dollars-da...
in:
https://qz.com/1150533/the-dollars-da...
May 6, 2018
This short book looks at the history of currencies for guidance on how long the U.S. dollar will remain the dominant global currency. Much of the history tells the story of how the world moved from the British pound as the international currency to the U.S. dollar. Using new data from the 1920's and 1930's, the authors show that this move happened faster and earlier than many people think. They disagree with the traditional view that dominant currencies will persist long after a country's economic dominance has declined. And they show that multiple reserve currencies can coexist. They expect the dollar will have rivals sooner than later.
Although an academic book with some statistical analysis, the book is easy to read with short chapters that get to the point. Along the way, the authors explain why and how businesses and governments conduct currency transactions, which helps us understand what drives preferences in currencies. All of this work is relevant to thinking about changes that might take place if China overtakes the U.S. as the largest economy.
Although an academic book with some statistical analysis, the book is easy to read with short chapters that get to the point. Along the way, the authors explain why and how businesses and governments conduct currency transactions, which helps us understand what drives preferences in currencies. All of this work is relevant to thinking about changes that might take place if China overtakes the U.S. as the largest economy.
March 10, 2020
A sad and idiotic book.
Sad because the story of the Emperor's clothes is still retold by so many intellectual frauds, like Eichengreen and his gang.
Idiotic, because the only qualification of the gang is how to kiss the rears of the tenure committee. A story about whim covered in multiple layers of flatulence. The old story of whatever the king pleases packed as something never seen before. In there the authors talk of how the central banks started hoarding certain fiat money. Because they have interviewed for hours the former governors of the Bank of Babylon. Also, newspaper articles clearly show that the First Bank of Mesopotamia was unsuccessful in dealing fiat money to the Central Bank of Judea.
Finally, what else could one expect from snake oil sales people? They have the science of predicting the whims of the future kings. All you have to do is keep paying your taxes as they are shooting for a generous pension plan, not just a simple tenure.
Sad because the story of the Emperor's clothes is still retold by so many intellectual frauds, like Eichengreen and his gang.
Idiotic, because the only qualification of the gang is how to kiss the rears of the tenure committee. A story about whim covered in multiple layers of flatulence. The old story of whatever the king pleases packed as something never seen before. In there the authors talk of how the central banks started hoarding certain fiat money. Because they have interviewed for hours the former governors of the Bank of Babylon. Also, newspaper articles clearly show that the First Bank of Mesopotamia was unsuccessful in dealing fiat money to the Central Bank of Judea.
Finally, what else could one expect from snake oil sales people? They have the science of predicting the whims of the future kings. All you have to do is keep paying your taxes as they are shooting for a generous pension plan, not just a simple tenure.
December 31, 2018
Dry, textbook-style writing. I thought reading this would be an update to Eichengreen's Exorbitant Privilege, published in 2011 and recommended to me. Instead, this was the condensed version of Eichengreen et al's Ph.D. thesis (I guess), which spent as much / more time discussing the methodology of the group's research as the implications. Case in point: 40% of the Kindle content is footnotes. TLDR: Deep, liquid financial markets and confidence in the stability of the currency's value are the most significant factors affecting the world's collective decision to designate a reserve currency, and there's historical precedent for state banks, private banks, and traders using multiple reserve currencies and switching between them over short time periods (10-20 years). The authors' qualitative analysis suggests that crises in the Euro area, lack of financial integration between EU states, and lack of liquidity and transparency in Chinese financial markets will limit the ability of the euro or the yuan to fully supplant the dollar as international reserve currency in the near term, but that doesn't mean that investors will reduce dollar reserves in favor of the new currencies. Hopefully Eichgreen's previous book can explain more about why we should care?
May 27, 2018
A brief, academic-yet-accessible economic history of global currencies, which sets out to challenge the theory that there can only be one dominant global currency at any one time. The authors are largely successful in this, utilising as much of the admittedly-patchy data as is possible, as well as examining fallacies in the traditional historical narrative, to demonstrate both that the nation with the largest GDP does not necessarily dominate the global currency market, and that there is room for more than one major global currency.
The majority of the book examines the fortunes of the dollar and sterling, historically the two most important currencies. The authors demonstrate that sterling survived as a major currency for far longer than was previously understood, whilst the dollar was far slower in encroaching on sterling's territory than previously believed.
In order to provide a more complete picture of the subject, short chapters are dedicated to the yen and the renminbi, whilst the book concludes with a chapter outlining a few potential directions in which the global currency markets might move.
The majority of the book examines the fortunes of the dollar and sterling, historically the two most important currencies. The authors demonstrate that sterling survived as a major currency for far longer than was previously understood, whilst the dollar was far slower in encroaching on sterling's territory than previously believed.
In order to provide a more complete picture of the subject, short chapters are dedicated to the yen and the renminbi, whilst the book concludes with a chapter outlining a few potential directions in which the global currency markets might move.
September 18, 2018
To be honest some of the more technical details on modeling were a bit of a slog, but it gave a very concise and helpful summary of the importance of currencies in the global economy as well as a good, if necessarily brief, history of global currency markets and exchange. The central thesis is that, contrary to conventional wisdom of one currency necessarily achieving hegemony, multiple currencies not only can co-exist but have done so throughout history. The authors analyze why the British Pound persisted so long as a reserve currency despite the strengthening American economy, why the US was so late to overtake it, and Chinese efforts to establish the renminbi as an international currency.
April 8, 2020
Part history, part academic paper, this book provides a quick scan of the development of international reserve currencies over the past two centuries. Worth reading for anyone who has wondered if the current reign of the USD as prime reserve currency will eventually be supplanted by the RMB.
The chapters on the decline of the sterling as reserve currency, and the rise and subsequent fall of the Yen were also pretty interesting.
The chapters on the decline of the sterling as reserve currency, and the rise and subsequent fall of the Yen were also pretty interesting.
January 26, 2019
My on a curve rating system strikes again.
Good book, just in the bottom 20% of my reading, no slight to Prof. Eichengreen.
He is a bit obsessed with the renminbi in this book, which nicely brings together monetary policy history to make the case that multiple reserve currencies can co-exist.
Good book, just in the bottom 20% of my reading, no slight to Prof. Eichengreen.
He is a bit obsessed with the renminbi in this book, which nicely brings together monetary policy history to make the case that multiple reserve currencies can co-exist.
September 12, 2022
fairly technical & academic, but the prose is excellent, the conclusions can be easiliy condensed in a few pages.
September 8, 2025
Interesting thesis which was argued well. More coverage of post-currency / fiat alternatives would've elevated the reading experience
January 1, 2021
8/10
This is a great history of global currencies for anyone with a bit of background in economics or finance. Often we read headlines warning that the US will loose its status as the most widely used currency or that the Chinese reminbi will be the next big global currency. Barry Eichengreen provides a level headed assessment of these claims, looking to the history of other global currencies like the British pound. The simplistic popular narrative is that there can only be one global currency at a time, which then benefits from strong network effects and that Great Britian passed the batton to the US after WWII. In constant, with new data Eichengreen shows that the US dollar and GB pound exchanged places multiple times in early 20th, effectively serving as 2 parallel global currencies with fluctuating status for more than a decade. He also details how important policy choices, rather than a purely natural evolution helped and hindered these currencies. Using these lessons he looks to the developments of other major currencies like the yen, euro, and reminibi. This is a great read for anyone interested in history and international economics.
This is a great history of global currencies for anyone with a bit of background in economics or finance. Often we read headlines warning that the US will loose its status as the most widely used currency or that the Chinese reminbi will be the next big global currency. Barry Eichengreen provides a level headed assessment of these claims, looking to the history of other global currencies like the British pound. The simplistic popular narrative is that there can only be one global currency at a time, which then benefits from strong network effects and that Great Britian passed the batton to the US after WWII. In constant, with new data Eichengreen shows that the US dollar and GB pound exchanged places multiple times in early 20th, effectively serving as 2 parallel global currencies with fluctuating status for more than a decade. He also details how important policy choices, rather than a purely natural evolution helped and hindered these currencies. Using these lessons he looks to the developments of other major currencies like the yen, euro, and reminibi. This is a great read for anyone interested in history and international economics.
February 19, 2022
In this brief book Barry Eichengreen and co-authors present the development of the global currencies. The chapters are quite brief and, except the first two, read like a collection of research articles, with a lot of tables, charts and some regressions.
Some of the main insights include: the possibility of having more than one global currency (as shown by co-existence of dollar and sterling in this role in the early 20th century), and the rise of dollar to the dominant position in mid-20s rather than commonly assumed post-WW2.
Additionally, the authors trace the rise and fall of the yen, the rising prominence and stagnation of the euro, and the potential bright future of the RMB.
Some of the main insights include: the possibility of having more than one global currency (as shown by co-existence of dollar and sterling in this role in the early 20th century), and the rise of dollar to the dominant position in mid-20s rather than commonly assumed post-WW2.
Additionally, the authors trace the rise and fall of the yen, the rising prominence and stagnation of the euro, and the potential bright future of the RMB.
January 25, 2022
If you are searching for a book written to be engaging for all audiences casually interested in global currencies (such as Freakonomics), this book would not be my first recommendation. However, if you are searching for a more dry, academically focused book and have some background knowledge in economics and econometrics, you may find it worthwhile. The book did border on being repetitive at times; however, it did clear a few misconceptions regarding the fall of the sterling and the rise of the dollar. I found a few of the later chapters discussing the yen and the euro to be particularly interesting. Furthermore, a discussion of a few of the panel data regressions in the sixth chapter yielded some unexpected results. I felt as if the discussion on China's possible entrance into the global currency system as a major player was rather short and the analysis was primarily concerned with the case study of the shift from the sterling to the dollar. That being said, it is the only case there is to analyze; however, I was a little disappointed there was not more discussion regarding the future of the global currency system.
Displaying 1 - 13 of 13 reviews