International Money and Common Currencies in Historical Perspective

Lothian, James R.; Dwyer, Gerald P.

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International Money and Common Currencies in Historical Perspective

Monetary Union, George M. von Furstenberg, ed., Oxford University Press, 2003

26 Pages Posted: 4 Nov 2004

See all articles by James R. Lothian

James R. Lothian

Gabelli School of Business, Fordahm University; National Bureau of Economic Research (NBER)

Gerald P. Dwyer

Clemson University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

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Abstract

We 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, we conclude that the euro is likely to be serious competition for the dollar as the international money.

Keywords: Monetary history, international money, monetary institutions

JEL Classification: E42, F33, N10

Suggested Citation: Suggested Citation

Lothian, James R. and Dwyer, Gerald P., International Money and Common Currencies in Historical Perspective. Monetary Union, George M. von Furstenberg, ed., Oxford University Press, 2003, Available at SSRN: https://ssrn.com/abstract=613690