UC Riverside

Currency Warfare defined as the use of weaponized monetary or military force again an adversary’s currency during armed conflicts is common fixture of armed conflicts. However, the puzzle of why currency warfare is implemented in some armed conflicts but not others remains largely unexplored. This dissertation addresses this question by providing a theory of currency warfare implementation and argues that currency warfare occur when three necessary variables come together: (1) a threat to national security; (2) a strategy of subversion; and (3) that the costs (measured in political, economic, military and ethical terms) are lower than the benefits of implementing currency warfare. I further argue that what links these three variables together in a causal chain are the perception held by those decision-makers empowered to make the decision of whether to implement currency warfare or to refrain from doing so.

I test my hypothesis by applying process-tracing to within-case analysis of positive and negative cases of currency warfare. I examine eight positive and negative cases from the American Revolution (1775-1783), Napoleon Bonaparte’s war against Austria in 1809, The American decision to counterfeit Japanese currencies but not the German Reichsmark during the Second World War (1939-1945), The Suez War (1956) and the Middle East Crisis of 1958, the Persian Gulf War (1990-1991) and the ongoing ISIS War (2014-Present). The evidence indicates support for my proposed theory of currency warfare implementation providing for the first time a systematic framework by which to explain when and why currency warfare is implemented in some armed conflicts but not others.