ABSTRACT
One of the most conspicuous manifestations of globalization in the contemporary era is the spread of cross-border competition among currencies. Over the last half century, linkages between national financial systems have grown increasingly tight: a particularly striking example of what Sylvia Ostry (this volume) calls “deeper integration” in today’s world economy. As a result of this deeper integration, the strict dividing lines between separate national monies have become less and less distinct. No longer are economic actors restricted to a single currency-their own home money-as they go about their daily business. More and more, whether at home or abroad, market agents are able to exercise effective choice in deciding what currency to use as medium of exchange, unit of account, or store of value. This is the new geography of money-the new configuration of currency space.1 The functional domain of each national money no longer corresponds precisely with the formal jurisdiction of its issuing authority. Currencies today have become increasingly deterritorialized, their circulation determined not by law or politics but rather by the dynamics of the global marketplace.
