To set definite datelines for the beginning and end of the period during which the dollar reigned as the supreme currency of the free world and its supremacy was above suspicion would be gross oversimplification. We saw in the last chapter that its progress towards supremacy had been a very gradual process, interrupted from time to time by setbacks. To some extent sterling held its own, notwithstanding Britain’s inter-war and post-war difficulties, as a rival to the dollar. Until 1967 a large proportion of world trade continued to be transacted in sterling, even though its importance as a reserve currency declined. The resumption in 1958 of full convertibility of non-resident sterling and of a number of other currencies stimulated activity in the London foreign exchange market. Right until 1967 most foreign exchange business in continental financial centres was based on the sterling cross rate with the foreign currencies transacted. Nevertheless, the supremacy of the dollar was uncontested. It progressed from strength to strength in spite of occasional setbacks such as the one caused by the Korean War.
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