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Currency Competition: A Hayekian Perspective on International Monetary Integration


  • A longer version of this paper was presented at the Colloquium on Market Institutions and Economic Processes, Department of Economics, New York University, February 2008. I am obliged to Colloquium participants for their comments and to the referee's helpful remarks.


Currency internationalization is examined from the vantage point of Friedrich Hayek's contributions in the 1970s. Compared with received commentaries in which only an idealized case for private money is attributed to Hayek, this paper underscores other dimensions of Hayek's work on money and currency. Hayek's case for “choice in currency” draws on his theory of competition, anticipates competition between government suppliers of fiat money, accommodates many aspects of international monetary integration, and embodies a distinctive approach to monetary independence, choice of exchange rate regime, and the transnationalization of currency. Hayekian predictions are outlined for future developments in currency competition.