Sterling's Persistence as a Reserve Currency: Australia and Reserves Pooling, 1950–68

Francis Kennedy

Australian Economic History Review, 2019, vol. 59, issue 3, 309-337

Abstract: Financial historians have noted sterling's persistence as a reserve currency after the Second World War. Yet they regard Australia, the leading ‘sterling area’ country, as an early diversifier, substituting other assets for sterling, and the sterling area as an irrelevance by the 1960s. This is an archive‐based account of Australia's reserve management in 1950–68, emphasising the persistence of reserves pooling. Acquisition of non‐sterling assets in 1951–61 was limited to gold production and undermined by Australia's balance‐of‐payments volatility. Diversification only began in 1962, largely through the International Monetary Fund ‘gold tranche’. Diversification was gradual, hidden, and constrained by sterling area membership.

Date: 2019
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