Open Economies Review

, Volume 23, Issue 1, pp 57–87 | Cite as

The Federal Reserve, the Bank of England, and the Rise of the Dollar as an International Currency, 1914–1939

  • Barry Eichengreen
  • Marc FlandreauEmail author
Research Article


This paper provides new evidence on the rise of the dollar as an international currency, focusing on its role in the conduct of trade and the provision of trade credit. We show that the shift to the dollar occurred much earlier than conventionally supposed: during and immediately after World War I. Not just market forces but also policy support—the Fed in its role as market maker—was important for the dollar’s overtaking of sterling as the leading international currency. On balance, this experience challenges the popular notion of international currency status as being determined mainly by market size. It suggests that the popular image of strongly increasing returns and pervasive network externalities leaving room for only one monetary technology is misleading.


International currency Liquidity Acceptances Interwar Gold standard Dollar Sterling 

JEL classification

E42 F33 N12 


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.University of CaliforniaBerkeleyUSA
  2. 2.International History and International Economics at the Graduate Institute of International Studies and DevelopmentGenevaSwitzerland

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