Emerging Currency Blocks

When countries in the 19th century joined the gold standard one-by-one, they were seeking to acquire more than just stability in the values of their currencies. They were moving toward closer integration, financially and economically, with the world economy. After World War I, the system fragmented into currency blocs and trading blocs: Sterling bloc, gold bloc, Central Europe bloc, and dollar bloc.1 The allies who met at Bretton Woodsin 1944 were determined not to repeat after World War II the fragmentation and instability that had characterized the interwar years. The ensuing period of growth in world trade and income indeed seemed to be closely associated with the common world monetary standard, the dollar standard.