NEW BOOK: MONEY BEYOND BORDERS

Doubts about the international dominance of the dollar are only growing amid worries about tariffs, political dysfunction, and fraying international alliances. Will the dollar continue to reign supreme? In Money Beyond Borders, the leading authority on international currencies, Barry Eichengreen, puts the dollar's prospects in deep historical perspective by chronicling the entire history of cross-border currencies, from the invention of coins in the seventh century BCE to the cryptocurrencies of today and the central bank digital currencies of tomorrow.

Money Beyond Borders recounts how Greek and Roman coins became the first true international 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 international economy in the nineteenth 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 preeminence since the 1970s.

The long 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 2,500 years, the book offers valuable lessons and insights about how currencies rise—and why they fall.

For more information, or to order, see:
Money Beyond Borders: Global Currencies from Croesus to Crypto (https://press.princeton.edu/books/hardcover/9780691280530/money-beyond-borders)

What inspired you to write a history of global currencies, and why did this feel like the right moment?

Barry Eichengreen: I wrote the book because of a confluence of two factors. First, angst about the global role of the U.S. dollar. The dollar is used, as everyone knows, not just in the United States but around the world. But now there are worries that the U.S. is squandering the benefits of the currency's singular status. Some worries are familiar, such as those around the country's soaring debts. But others are new, such as whether the U.S. is a reliable alliance partner. We see the Europeans actively seeking to move away from the dollar as a way of hedging their bets, as a way of limiting their exposure to the currency of an erratic foreign power. I thought that looking at these issues historically – at how geopolitics and not just economics have shaped the international influence of currencies – could shed light on our current predicament.

Second, we're in the midst of a digital revolution where new financial technologies – cryptocurrencies, stablecoins, central bank digital currencies and the like – are radically reshaping the global financial landscape. Of course, the monetary and financial landscape has never stood still. There have been financial innovations before. But I thought that tracing the impact of such innovations on the rise and fall of monies, going back all the way to the invention of coinage itself, in Lydia in the 7th century BCE, could help us better understand what is coming.

Your book shows that currencies rise and fall for similar reasons. Is there a past example that really captures this pattern?

BE: My favorite example is probably by solidus of Byzantium, and not just because the historian Robert Lopez, writing 75 years ago, dubbed it "the dollar of the Middle Ages." By the 5th century CE, the solidus was used in trade everywhere from India to Britain. Its wide acceptance rested on its stability – its value remained unchanged for 7 centuries. It rested on Byzantium's prowess as a trading power – as an economy strategically positioned between Europe and Asia. It rested on the reputation of Byzantine officials for fiscal probity and fair administration of taxes.

But over the centuries, Byzantium's economy decayed for a combination of internal and external reasons. Land became concentrated in the hands of large estate holders, who used their political leverage to extract concessions, including tax exemptions, from the imperial administration. Powerful enemies bogged down the Byzantines in endless military conflicts. Rising powers like the city-states of Genoa and Venice challenged seafaring Byzantine traders but also developed international currencies of their own. By the end of the 11th century, the gold solidus was history, as they say.

To read the complete article, see:
Barry Eichengreen on Money Beyond Borders (https://press.princeton.edu/ideas/barry-eichengreen-on-money-beyond-borders)

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