International Currency

B13　—　Cross-cutting theme

One country’s coin becomes another country’s money.

Supervised by: Mitsuru Hayama　／　Reading time (main text): About 8 min (4,018 characters of text at 500 chars/min; exercises and readings not included)　／　Beyond the text: 11 exercises · 6 coins · 11 readings · 1 references

What this course teaches you to do

• You can name three conditions for becoming an international currency.
• You can explain what it means when a coin comes to be called by a local name.
• You can state the inconvenience borne by the country holding the key currency.
• You can follow how a coin arriving from outside changes that country's system.
• Can explain pre-modern international currencies (Athenian owl, Kaiyuan Tongbao, dirham, piece of eight) along with their patterns of diffusion.
• Can discuss the two Bretton Woods plans and the “strengthening through crisis” structure of the dollar standard.

Lessons (8)

1. Three conditions for becoming an international currencyThe conditions are quantity, stability, and being passable onward. The third makes the changeover sudden.
2. Called by a local name — the sign it took rootA local name is the sign it took root. But rooting does not prove it was a good coin.
3. The country with the key currency also takes the burdenBeing the key currency is privilege and burden. You cannot move it for your own sake, and supplying the world unbalances you.
4. A coin from outside remakes the systemAccepting a foreign coin is not defeat but a trade: sovereignty given, cost and quality gained.
5. The First International Currencies — The Owl, Kaiyuan Tongbao, and DirhamThe Owl, backed by silver mines; the Kaiyuan Tongbao, which became a model; the Dirham, which reverted to its weight. Three patterns of circulation.
6. The Sea of the Eight-Real — The First True World CurrencySilver from Potosí and Iwami circulated the globe. Even the daily money in the British colonies was Spanish silver.
7. The Blueprint from the Mountain Hotel — Bretton WoodsA money with no nationality versus the dollar. The dynamics of the conference were controlled by the creditor nation. The moment a shift in power took institutional form.
8. Stronger with every crisis — The paradox of the key currency.Even in a crisis with its epicenter in America, the world sought dollars. The change of the key currency is postponed by the absence of a substitute.

Readings (11)

• The country that threw away its coinage　Japan　the end of the 11th century–1179　The Port of Hakata
  §4. An article using the phrase "the disease of coin." Feel how a foreign money covers a country.
• The lion daalder goes out into the world　Netherlands　the 17th century　A Levantine port, the eastern Mediterranean
  §2. The scene where it comes to be called by a local name.
• Britain　Overview: 2,700 years of the world　the 19th century　The Pound, Anchor of the World
  §3. The account of the period when the pound became the world's measure.
• The silver rider　Netherlands　1659　A mint of the Republic
  The silver rider. Note the purpose for which a coin made for international settlement was born.
• Byzantium　Overview: 2,700 years of the world　the 9th–10th centuries　The Northern Trade Routes
  Section 5. Demoted to bullion the moment it crosses a border—the other side of the conditions for an international currency.
• The country of the Spanish dollar　United States　the 17th–18th centuries　Potosí, the mountain of silver
  Section 6. A scene of daily life in the British colonies, run on Spanish silver.
• Bretton Woods　United States　July 1944　Bretton Woods, the seat of the American delegation
  Section 7. A record of the moment a shift in power took institutional form.
• The weight of being the reserve　United States　2008　The financial district on the night of the crisis
  Section 8. The paradox of demand for the epicenter's currency. The birth of the world's lender of last resort.
• A foreign silver coin becomes the standard　China　the 18th–19th centuries　A table settling in foreign silver coin
  The country that collected the most silver in the world traded using foreign-made silver coins as its standard. From the premise that minting is a state guarantee of weight and fineness, please read about the conditions under which foreign currency can take hold.
• Money Born from Law　Greece　Middle Ages　At the End of the Trade Routes
  This is a gold coin called "the dollar of the Middle Ages" in a 1951 paper. Please observe the method of mapping its circulation area not through documents, but through the distribution of its find spots.
• The Rivals　Mexico　1871–1895　Bombay/Hong Kong
  This is a record from 1895, when even the country of the pound sterling created a dedicated trade dollar for Asian ports. Please read why those who challenge the standard-setter end up competing with the same weight of silver as their rival.

Assessment

11 exercises in this course (7 check, 1 compare, 3 written). Progress is recorded by self-assessment.

References

• Russia's War on Ukraine: Financial and Trade Sanctions (IF12062) — U.S. Congressional Research Service　Official disposition of frozen foreign currency reserves (approx. 300 billion USD). A case study in the geopolitics of reserve currencies.

Only works and primary sources whose existence has been verified are listed.