The 1971–4 Crisis

  • Peter Coffey


The confirmed power of the European Economic Community, the end of the role of the pound sterling as an active reserve currency, the imminence of Britain’s membership of the Common Market and the weak position of the dollar — all heralded the beginning of a decade of considerable international economic change. Two further facts underlined the potential strength of future changes in the international monetary sphere. One was the existence of massive amounts* of uncontrolled international liquidity — much of this finance was in the Euro-dollar market, which was being fed by some central banks; the majority was however in the hands of multinational enterprises. The other fact was the acceptance by nations of a fundamental change in monetary policy. Thus, nations such as Britain and the United States, which had formerly considered any thoughts about the possibility of floating their currencies as being quite taboo, were beginning openly to discuss the possible necessity to accept floating. The international monetary world had indeed changed.


Monetary Union European Monetary Union Finance Minister European Economic Community Capital Movement 
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  1. A full account of the progress made in 1970 can be found in P. Coffey and J. R. Presley, European Monetary Integration (London: Macmillan, 1971).Google Scholar

Copyright information

© Peter Coffey 1974

Authors and Affiliations

  • Peter Coffey
    • 1
  1. 1.Europa InstituutUniversity of AmsterdamNetherlands

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