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We are grateful to the The Open Society Institute - Assistance Foundation (Soros Foundation) without whouse assistance this Book could not exist.


Contents

Tables
Preface
Abbreviations

Introduction: Money in International Affairs

  1. The Meaning of Monetary Geography
  2. Territorial Money
  3. Subordinating Monetary Sovereignty
  4. Sharing Monetary Sovereignty
  5. Currency Competition and Hierarchy
  6. A New Structure of Power
  7. Governance Transformed
  8. Can Public Policy Cope?

Notes
References
Index

Preface

Money is much on our minds these days. In Europe, debate rages over the pros and cons of a new common currency to replace existing francs, lire, and pesos. In the former Soviet bloc and many parts of the developing world, governments agonize over how to respond to the widespread circulation of popular foreign moneys, most notably the U.S. dollar, within their territorial frontiers. In the Far East, Asians ponder the risks and opportunities of a possible new bloc in the region based on the Japanese yen. And in the United States, Americans worry about threats to the proud greenback's traditional preeminence in international monetary affairs.

Though seemingly technical in nature, these questions are anything but neutral in their implications for the distribution of global wealth and power. In fact, they go to the very essence of what we mean by state sovereignty in the world today. All carry implications for geopolitical relations that go well beyond the simple economics of who uses what currency and where. At issue is a breakdown of the territorial monopolies that national governments have historically claimed in the issue and management of money. Underlying all these challenges is a growing, market-driven competition between currencies that is increasingly indifferent to the presence of political boundaries or even the nation-state itself.

Responses to these challenges, however, remain mired in outmoded myths about the spatial organization of currency relations: the traditional but increasingly obsolete notion that each money's circulation is-or should be-confined solely to the sovereign domain of its issuing government. Such ways of thinking merely perpetuate misunderstanding and hinder practical policy remedies. What we need is a new lens through which to view the revolutionary changes in currency space wrought by accelerating cross-border competition. The purpose of this book is to provide a corrective for our defective vision.

The immediate impetus for the book was an article I wrote in 1993 for a collection of essays on European monetary unification (B. Cohen 1993a). Reviewing the historical experience of six experiments in monetary union, three of them still in existence, I began to ponder the broader question of how currency spaces are organized. Gradually I became more and more absorbed by what I came to call the geography of money.

Once embarked, however, I came to realize that this project's roots really go much further back-indeed, to the very first article I ever published in a professional journal, about a third of a century ago (B. Cohen 1963). "The Euro-Dollar, the Common Market, and Currency Unification" explicitly addressed the complex relationship between geography and sovereignty in monetary matters. The seeds sown then have now, many years later, finally come to fruition. In a sense, this is a book that I have been waiting to write all my life.

The Geography of Money is rooted as much in economics, the discipline in which I received all my formal university training, as it is in political science, my adopted profession. Although addressed primarily to students of the politics of money, a subcategory of the now recognized specially of International Political Economy, the book will, I hope, have broader significance for the study of international relations and may have some resonance in related fields, including economic history, sociology, and geography. With luck I may even pique the interest of a few economists, who among social scientists are likely to experience the most difficulty in adjusting their thinking to the perspectives I develop here. The language of the book is designed to be accessible to the widest possible audience.

BENJAMIN J. COHEN,
Santa Barbara, California