Chronicling cross-border currencies, and how the same traits making a currency popular eventually cause its downfall
Comprehensive: Leading economist Barry Eichengreen puts the dollar’s prospects in deep historical perspective by chronicling the entire history of cross-border currencies in Money Beyond Borders: Global Currencies from Croesus to Crypto. Photo: Supplied.
Money Beyond Borders: Global Currencies from Croesus to Crypto is not the first book about international currencies by American economist and economic historian Barry Eichengreen.
It is, however, his effort to show a new perspective by “widening the aperture”, whereby it seeks to “better understand the future by peering further into the past”.
The leading authority on international currencies, Eichengreen knowledgeably explores the concept that success breeds the seeds of its own destruction. To paraphrase, the central premise in Money Beyond Borders is that the very forces that make a currency globally popular eventually cause its decline.
The distinguished professor at the University of California, Berkeley, puts the dollar’s prospects in deep historical perspective by chronicling the worldwide monetary system.
“In this volume, wisely or not, I attempt to recount the entire history of international currencies — the cross-border use of coins, notes, and other monetary claims — from the Lydians of ancient Anatolia, who are credited with inventing coinage in the seventh century BCE, all the way up to the cryptocurrencies of today and central bank digital currencies of tomorrow,” Eichengreen writes.
“To be clear, this book is not another history of currency and coin. It is not another history of money. It focuses squarely on cross-border use, on the use of currency, coin, and bank money in international transactions involving parties residing outside the borders of the issuing state, nation, or kingdom.
“In practice this means the international use of national currencies. National governments generally reserve for themselves control of the money printing press and, before that, the mint. It follows that there is a tension between the national origin of money, whose management is under the authority of a government that privileges the interests of that same nation, and the existence of an integrated global economy, whose operation rests on international monetary foundations.”
He highlights some fascinating global currencies, showing that legal tender rises and falls for similar reasons.
Money Beyond Borders recounts how Greek and Roman coins became the first true universal currencies. It tells how the Florentine gold florin became the “greenback of the Renaissance”, and how it was succeeded by Spanish silver and a Dutch fiat currency. The book explains why the British pound dominated the intercontinental economy in the 19th century, why the dollar rose to the top during World War II, and why the dollar has survived predictions of the imminent loss of its pre-eminence since the 1970s.
This comprehensive history of international currencies shows that the same factors that encourage their widespread use eventually lead to their abandonment. Money Beyond Borders makes a powerful case that the dollar is now on the downside of this cycle, and it considers who the winners and losers will be when there is flight away from the greenback. Revealing important patterns in the life cycles of international currencies over the past 2500 years, the book offers valuable lessons and insights into how currencies rise — and why they fall.
This 334-page hardback is about the tension between national currencies and the international economy and how it has played out over time. The issues are long-standing.
Of course, today, the national currency that ranks first among equals is the US dollar, which is widely used in international transactions. It is prominently used in commercial and financial transactions not just between Americans and foreigners, but also among foreigners themselves — that is, among parties who do not reside in the US and whose transactions do not touch American shores.
Used around the world, the dollar is the financial grease in the wheels of 21st-century globalisation, but this very fact creates tension between US monetary and financial policies, which seek to advance America’s national interests, and the dependence of other countries on the international financial services provided by the US dollar.
Uncertainties about the international supremacy of the dollar are only growing amid concerns about tariffs, political dysfunction and fraying global alliances. A common inquiry is: will the US dollar maintain its global dominance? What is its future? What are the signs Eichengreen sees that suggest where it might be headed next? “The dollar’s global dominance has been eroding very gradually, especially as a form in which central banks hold their reserves …”
Currencies, worldwide, go through a life cycle. “The ability to mint a global currency has enormous benefits for a country. But this status is not forever; to endure, it has to be carefully and consistently nurtured. It can’t be taken for granted. And it is not something to squander.”
Money Beyond Borders: Global Currencies from Croesus to Crypto, by Barry Eichengreen, Princeton University Press, $49.99
