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Open Access Publications from the University of California

The Geopolitics of Currencies and the Future of the International System

  • Author(s): Cohen, Benjamin J.
  • et al.

Geopolitics, the dictionary tells us, is about international great-power rivalries – the struggle for dominance among territorially defined states. Conflict is at the heart of geopolitics. Geopolitical relations are dynamic, strategic, and hierarchical. In geopolitics, the meek definitely do not inherit the earth.

Today, much the same can be said about currencies, which in recent years have become increasingly competitive on a global scale. Monetary relations, too, have become conflictual and hierarchical; and the meek are similarly disadvantaged. At issue is a breakdown of the neat territorial monopolies that national governments have historically claimed in the management of money, a market-driven process that elsewhere I have described as the deterritorialization of money (Cohen 1998, 2003a). In lieu of monopoly, what we have now is more like oligopoly – a finite number of autonomous suppliers, national governments, all vying ceaselessly to shape and manage demand for their respective currencies. Since state are no longer able to exercise supreme control over the circulation and use of money within their own frontiers, they must instead do what they can to preserve or promote market share. As a result, the population of the monetary universe is becoming ever more stratified, assuming the appearance of a vast Currency Pyramid -- narrow at the top, where the strongest monies dominate; and increasingly broad below, reflecting varying degrees of competitive inferiority.

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