Sterling's Past, Dollar's Future: Historical Perspectives on Reserve Currency Competition

Barry Eichengreen

NBER Working Paper No. 11336
Issued in May 2005
NBER Program(s):The Program on the Development of the American Economy, The International Finance and Macroeconomics Program

This paper provides an historical perspective on reserve currency competition and on the prospects of the dollar as an international currency. It questions the conventional wisdom that competition for reserve-currency status is a winner-take-all game, showing that several currencies have often shared this role in the past and arguing that innovations in financial markets make it even more likely that they will do so in the future. It suggests that the dollar and the euro are likely to share this position for the foreseeable future. Hopes that the yuan could become a major international currency 20 or even 40 years from now are highly premature.

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Document Object Identifier (DOI): 10.3386/w11336

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