The Rise and Fall of World Currencies: How the Dollar Overtook the Pound and the Dutch Guilder Surpassed the Spanish Real, which had overtaken Italy’s Ducat
Simon Ateba is Chief White House Correspondent for Today News Africa covering President Joe Biden, Vice President Kamala Harris, U.S. government, UN, IMF, World Bank and other financial and international institutions in Washington and New York.
With the debate raging in Africa on whether to abandon the US dollars for local currencies for intracontinental trading and with my argument that it’s easier said than done, I wanted to provide some background as everything that is happening now has happened in the past in one form or another. We don’t just remember. Learning from history, the US will pay all its attention to China, not Russia, and will even quickly resolve the war in Ukraine to prepare for what is coming next: China.
The dominant world currency before the US dollar was the British pound sterling. It held a prominent position in international trade and finance, particularly during the 19th and early 20th centuries when the British Empire was at its height. The pound sterling served as the primary reserve currency and was widely used for international transactions. However, with the decline of the British Empire and the emergence of the United States as a global economic power after World War II, the US dollar gradually replaced the pound sterling as the dominant world currency.
Before the pound sterling, the dominant world currency was the Dutch guilder. During the 17th and 18th centuries, the Netherlands was a major economic and trading power, and the Dutch guilder became the primary currency for international trade and finance. The Dutch Republic’s prosperous economy and global trading networks contributed to the widespread use of the guilder in international transactions. However, as the British Empire rose to prominence in the 19th century, the pound sterling surpassed the Dutch guilder and became the dominant world currency.
Before the Dutch guilder, the dominant world currency was the Spanish real, also known as the Spanish dollar or the piece of eight. The Spanish real was a silver coin that gained widespread acceptance and use in international trade during the 16th and 17th centuries. Spain’s extensive colonial empire, particularly in the Americas, allowed the Spanish real to become a widely recognized and trusted currency in global commerce. Its influence extended across Europe, Asia, and the Americas, making it the dominant currency of its time. The Spanish real’s prominence gradually declined with the rise of the Dutch guilder and later the British pound sterling. As you can see, currencies fail when the ’empire’ or the dominant power fall, and right now, the United States should be paying attention to China, not Russia, not Ukraine, but China. Unfortunately, the people in Washington seem to have given up.
Before the Spanish real, the dominant currency was the ducat. The ducat was a gold coin that originated in Venice, Italy, in the 13th century. It quickly gained popularity and became widely accepted across Europe as a reliable and valuable currency. The ducat remained a prominent currency for several centuries, used in international trade and by various European powers. Its reputation for stability and consistent gold content made it a preferred currency for commercial transactions and financial exchanges. However, as global trade and economic systems evolved, the ducat eventually gave way to other currencies, such as the Spanish real, as the dominant medium of exchange.
And before that, there were significant geopolitical shifts and power dynamics that shaped the dominant world currency. These changes have occurred throughout history, with various currencies holding influence and prominence at different times. It is a complex and dynamic narrative that spans centuries, reflecting the ever-changing landscape of global economics and politics. Understanding this historical context provides valuable insights into the evolution of international trade and finance.
Right now, the dollar is the dominant currency, but China is rising, and the yuan may or may not become the next dominant currency in the world.
