The Future of Money
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The Future of Money

Benjamin J. Cohen
Princeton UP, 2003
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6

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Recommendation

This book is a thoughtful, amply documented reflection on the future of currency. The dollar, euro and yen dominate the global monetary order, with the dollar now unrivaled at the top and unlikely to be threatened in the future. The countries that issue lesser currencies face a trade-off between monetary sovereignty and international acceptability (with all its economic advantages). Some economists say these lesser currencies should simply dollarize, that is, sacrifice their monetary sovereignty on the altar of international economic efficiency by adopting a stronger currency as their own. Author Benjamin J. Cohen argues that these countries are likely to reject dollarization because the emotional and political advantages of issuing one’s own currency are simply too strong. He suggests various alternate mechanisms that allow countries to maintain some monetary independence and authority while gaining the advantages of a fully liquid, widely used currency. Non-specialists may find his extensive discussions a bit dry or sometimes tedious, but getAbstract.com applauds the author’s ability to explore monetary economics in admirably lucid detail.

Summary

Issuing Money: Currency and Territory

Money matters. A currency gives political advantages to its issuer. Even in the past, when currency was gold or silver coins, the mint retained a piece of the ingot for the king. Nowadays, the issuer of a currency receives valuable, real benefits - including liquidity, low transaction costs and reliable value - in exchange for mere paper. A widely accepted currency becomes a badge of national status, because the respect users give the currency is largely a function of the awe inspired by the issuing country.

In the nineteenth century, national borders began to circumscribe the area of a currency’s legitimacy and acceptance. This was an innovation. In antiquity, a few monies were widely accepted. Roman and Greek coins traded far from Rome and Athens. Spanish coins bought fur and whiskey on the North American frontier. Money was not a function of territory.

Nowadays, money is again deterritorializing, as instantaneous global communication, trade and frequent travel shrink the currency world. Although many national currencies still exist, the international monetary structure seems to resemble a "Currency Pyramid" with a narrow...

About the Author

Benjamin J. Cohen is the Louis G. Lancaster Professor of International Political Economy at the University of California, Santa Barbara. He is the author of nine previous books, including Organizing the World’s Money, In Whose Interest and The Geography of Money.

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