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International money and common currencies in historical perspective

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Author Info
Gerald P. Dwyer, Jr.
James R. Lothian

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Abstract

The authors review the history of international monies and the theory related to their adoption and use. There are four key characteristics of these currencies: high unitary value; relatively low inflation rates for long periods; issuance by major economic and trading powers; and spontaneous, as opposed to planned, adoption internationally. The economic theory of the demand for money provides support for the importance of these characteristics. The value of a unit is arbitrary for a fiat money, but the other characteristics are likely to be important for determining any fiat money that will be the international money in the future. If the euro continues to exist for the next half century or so and has a relatively stable value, the authors conclude that the euro is likely to be serious competition for the dollar as the international money.

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Paper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2002-7.

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Date of creation: 2002
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Handle: RePEc:fip:fedawp:2002-7

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Keywords: Economic history;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Thomas Sargent & Noah Williams & Tao Zha, 2006. "The Conquest of South American Inflation," NBER Working Papers 12606, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Matsuyama, Kiminori & Kiyotaki, Nobuhiro & Matsui, Akihiko, 1993. "Toward a Theory of International Currency," Review of Economic Studies, Blackwell Publishing, vol. 60(2), pages 283-307, April. [Downloadable!] (restricted)
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  3. Selgin, George A, 1994. "On Ensuring the Acceptability of a New Fiat Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 808-26, November. [Downloadable!] (restricted)
  4. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August. [Downloadable!] (restricted)
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  5. Michael D. Bordo, 1993. "The Bretton Woods International Monetary System: A Historical Overview," NBER Chapters, in: A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, pages 3-108 National Bureau of Economic Research, Inc. [Downloadable!]
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  6. Michael R. Darby & James R. Lothian & Arthur E. Gandolfi & Anna J. Schwartz & Alan C. Stockman, 1983. "The International Transmission of Inflation," NBER Books, National Bureau of Economic Research, Inc, number darb83-1.
  7. Trejos, Alberto & Wright, Randall, 1995. "Search, Bargaining, Money, and Prices," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 118-41, February. [Downloadable!] (restricted)
  8. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August. [Downloadable!] (restricted)
  9. Anna J. Schwartz, 2001. "Assessing the Euro three years after its launch," The Region, Federal Reserve Bank of Minneapolis, issue Dec, pages 14-16.
  10. Sussman, Nathan, 1993. "Debasements, Royal Revenues, and Inflation in France During the Hundred Years' War, 1415?1422," The Journal of Economic History, Cambridge University Press, vol. 53(01), pages 44-70, March. [Downloadable!]
  11. Rolnick, Arthur J. & Velde, Fran?ois R. & Weber, Warren E., 1996. "The Debasement Puzzle: An Essay on Medieval Monetary History," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 789-808, December. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. James R. Lothian, 2003. "The Internationalization of Money and Finance and the Globalization of Financial Markets," International Finance 0311003, EconWPA. [Downloadable!]
    Other versions:
  2. Juan Piñeiro Chousa, & Artur Tamazian, & Davit N. Melikyan,, 2008. "MARKET RISK DYNAMICS AND COMPETITIVENESS AFTER THE EURO: Evidence from EMU Members," William Davidson Institute Working Papers Series wp916, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  3. Gerald P. Dwyer, Jr. & James R. Lothian, 2003. "The economics of international monies," Working Paper 2003-37, Federal Reserve Bank of Atlanta. [Downloadable!]
    Other versions:
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