The Geography of Money

by Benjamin J. Cohen

The traditional assumption holds that the territory of money coincides precisely with the political frontiers of each nation state: France has the franc, the United Kingdom has the pound, the United States has the dollar. But the disparity between that simple mental landscape and the actual organization of currency spaces has grown in recent years, as territorial boundaries of individual states limit currency circulation less and less. Many currencies are used outside their "home" country for transactions either between nations or within foreign states. In this book, Benjamin J. Cohen asks what this new geography of money reveals about financial and political power. Cohen shows how recent changes in the geography of money challenge state sovereignty. He examines the role of money and the scope of cross-border currency competition in today's world. Drawing on new work in geography and network theory to explain the new spatial organization of monetary relations, Cohen suggests that international relations, political as well as economic, are being dramatically reshaped by the increasing interpenetration of national monetary spaces. This process, he explains, generates tensions and insecurities as well as opportunities for cooperation.

Genres: Economics, International Relations, Politics, Nonfiction, Geography

248 pages, Hardcover

First published January 1, 1998

Reviews

[May Ling · Rating 4 out of 5]

Cohen does a good job of describing how the geography of money has mattered through out history and how that dynamic is changing in the current landscape. This work is actually very important as we look at the current world's state of affairs. Some key points.



First, he provides a brief, but thorough history of money since the Peace of Westphalia and shows that throughout time there have been many dominant currencies. However, no 1 single currency has maintained is dominance for a significant period of time. When we consider the British Sterling/pound and how much the dominance of this currency fell, it is particularly scary from a US dollar perspecive.





Second, he discusses the way in which the nations at the top of the currency food pyramid can essentially continue their imperial dominance over the smaller states by way of tampering with their supply of US dollars. A wonderful example was Panama. Point 1 combined with this point is a little scary from he perspective of how the current financial crisis will play out given who holds our reserves.



Third,he describes how the borders of money continue to become increasingly blurred



My personal take away is that, it is not as straight forward as I had originally guessed to replace the major dominant currency with another currency. Even when a currency is in decline it takes many many years for the balance of power to shift. For periphery currencies, he change is quite quick though. Hence, when shorting the USD, one really needs to be careful on timing.



Another take away is the more philosophical idea of what is money. The book discusses that it is a policy measure to incentive certain actions. For those countries that can control their money supply it appears to provide a fantastic method by which they can truly effect policy. For those nations lower on the money food chain, it provides a terrible means by which another country can incentivizes policy in your nation, without violence or actual presence on your soil. Fascinating and yet disturbing....

[Leonardo]

Es un lugar común que los estadounidenses usan dólares; los alemanes, euros; los japoneses, yenes, y los argentinos, pesos. De hecho, según el economista Benjamin J. Cohén, de la Universidad de California, Santa Bárbara, autor del libro titulado Geography of Money, «nada podría estar más lejos de la verdad». Esta idea se ha convertido en «una caricatura pasada de moda y engañosa», porque la competencia «ha alterado considerablemente la organización espacial de las relaciones monetarias».

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