Money and Market in the Economy of All Times: Another World History of Money and Pre-Money Based Economies

By Liviu C. Andrei

This is economics (see, monetary economics) and corresponding
economic history and focuses on what the book title suggests: money
and market developing from their very beginnings. First, some crucial
(,,hot) historical points are here identifyed: the market picture before
money entering history, then getting national and international through
what was the ,,gold standard; money out of its metal ,,base or ,,cover;
money as national and international after gold. Second, a substantial
debate reaches another level of developments: ,,representative, versus
,,fiat money (?). Third, how about international money, as different from
national (scale) money in context?

• Language: English
• Publisher: Xlibris UK
• Release date: Feb 18, 2011
• ISBN: 9781456865597

Liviu C. Andrei

Liviu C. Andrei was born near Bucharest, the capital of Romania, in 1954. He is a graduate of the University of Economics (Academia de Studii Economice) of Bucharest since 1978, but started his research and teaching economics activity after 1989, see since the Romanian Revolution. Then, he worked in some research departments and universities in Bucharest, attended training and research granted programmes in Lithuania, US and UK and published 5 books and more than 50 study articles and surveys in specialty. Preocupations for the area related to this book started much earlier, but written studies since 1996, when his doctoral paper.

Book preview

Money and Market

in the Economy of All Times

another world history of money

and pre-money based economies

Liviu C. Andrei

Copyright © 2011 by Liviu C. Andrei.

Library of Congress Control Number:   2011901934

ISBN: Hardcover    978-1-4568-6558-0

ISBN: Softcover      978-1-4568-6557-3

ISBN: Softcover      978-1-4568-6559-7

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to my son, Ionut

Around the next corner there may be lying in wait apparently quite novel monetary problems which in all probability bear a basic similarity to those that have already been tackled with varying degrees of success or failure in other times and places.

(Glyn Davies)

Contents

An Introduction: Some Points To Be Developed Onwards

Part one: what has been before the money-based economy ?

Part two: barter, as advanced, versus primitive

Part three: money and monetary system as pre-modern and modern

Part four: a crucial point in the money history: gold standard and bimetallism

Part five: the post-gold and contemporary money era

Selected Bibliography

Abbreviations:

BD—(State) budget deficit

BE—budget exceeding

BR—budget revenue

BS—budget spending

CAP—the Common Agricultural Policy of the European Community and Union

DM—Deutsche Mark

EBS—European Banking System

EC—European Community and European Communities

ECA—Euro Currency Area

ECB—European Central Bank

ECU—European Currency Unit

EMI—European Monetary Institute

EMS—European Monetary System

EMU—economic and monetary union

ERM—Exchange Rates Mechanism (see I and II)

EU—European Union

FDI—foreign direct investments

FED—American Federal Reserves (the central bank of the US) GDP—gross domestic product

IMF—International Monetary Fund (also called sometimes in text as the Found and Institution)

IMS—International Monetary System

LMU—Latin Monetary Union

M—money supply

MC—money in circulation

MR—money reserves

NATO—Northern Atlantic Treaty Organization

OCA—optimum currency area

OECD—Organization for Economic Cooperation and Development

OECE—Organization for Economic Cooperation in Europe

P—(general) price level

PPP—purchasing power parity (theory)

SDR—Special Drawing Right

SEA—Single European Act

SMU—Scandinavian Monetary Union

T—taxation

UK—United Kingdom

US(A)—United States (of America)

VAT—value added tax

AN INTRODUCTION

SOME POINTS TO BE DEVELOPED ONWARDS

The story below is about money. Jesus said once not to love money, as (time) as you love God. The interpretation of this might though be a limited one in the human perception, see not love money in your pocket. Or, this story is different than that, namely another way to love money. So, can I be sure about the limited interpretation of the words of Jesus? If yes, money can become a kind of a character in a book, a really divine character, as there will be seen below. If not, if money are not to be loved in any way, so this is exactly the opposite. It is dealing with devil just observing our character in the book. And this might be linked to the idea that the man has already walked out of God once building his own civilization.

0.1 Money, as a paradoxical concept

And money is the human civilization[1], as nobody can deny it and as essential for all human development(s). In such a context, money starts with three paradoxes of its own (Andrei 2007, pp. 15-17). First, it is man made, written matter and old enough. All the other writings, philosophies and philosophical systems, architecture, civilizations, as human creations, die one after another. They may be the older the more highly valuable, but vestiges at the same. On the contrary, money, as a so old creation, is still and very vivid and working. But there is not its long life[2] already its extraordinary point, but the aspect that the money existence looks endless, as seen from both the oldest times and today. And this is for money, as so similarly to . . . the Scriptures. Plenty of coins, banknotes and other money pieces are subjects of numismatics, but money is still not a vestige. On the other hand, there was once an ideology claiming that money was an economic relation among subjects which would end ones time, in a predictable future. That was communism and recent enough—but it was the communism ending first.

The second paradox of money is that it measures what? The market value, isn’t it ? And this is for the long thousands of years that it is. Or, the market value, as a concept, was almost clarified in . . . the nineteenth century, by Marxism and marginalism, two currents of thinking of the same age and geographical origins[3]. I say the value concept, as almost clarified, because the two scholar thoughts saw the value sources in some opposite ways: the Marxian view was finding this source in labour—so, in a factor of production, in the production itself, as opposite to consumption —, whereas marginalists here identified utility and rarity—so, it was market and consumption leading this process. The further these irreconcilable theories in the history of economics, in their turn, the less clear the value concept for the next following 20th century—and that whereas money does its job without any interference of basic economics. All the more, every State, since the ancient times, declares its metric system of measuring, see length, volume, and money market value.

Finally, the third paradox here comes when considering the market value measured by money, as a social convention qualified under another concept—I mean the one of the experiment. Money is an experiment of a really special condition from at least two points of view. Firstly, it is an experiment not made, as usually, just once for some other application to come, but an experiment repeated from its very beginning for its own purpose, as implemented. Nobody doubts about the length, volume or electricity that are measured by our conventional specific units, as much as these dimensions are very material—but nobody doubts about money, as measuring value either, in the same circumstances.

Secondly, let us admit that all experiments base and develop from fields

of science, as individuals. In which conditions, money is agreed to result from the economic field. But then, two problems arise. The first is that the economy and economics, correspondingly, are not quite appropriate to laboratories and experiments[4], as the exact sciences are likely to be developed, in their turn—experiments in economy are very rare and exceptional[5]. But, let us admit an experiment like money, on a so large scale, as an equally exceptional success. Then, another problem remains: money was born as an experiment of economics, whereas economics were coming to become a very science a long time afterwards.

0.2 A synthesis of the history of money

Let us admit that money is economy, as seen from the historical moment in time when these lines are here written, as much as all things will be here below seen from the position of such a moment of the human knowledge and thinking. Then, there becomes necessary to define the basic idea of all developments below, as for the money issue. It is about something that every manual of economics asserts in the most highly general terms: ". . . previously, people were bartering. The inconvenient content of barter cleared the way for using money, as the exchange instrument. . ." [6]

Firstly, in such a view the story of money below actually comes to be another history of money. But, there will be a different one. One in which there will not be the historical database, as crucial, and there won’t be just about an economic history of money developments. There will be equally about what was before the money existence and acting. Descriptions will try to understand how money was coming to be born, acting and working, as with their economic dimension and basing on the market process—then, the market requirements, connections and separate development. Market was one description before the money birth, it developed and now results into a different description nowadays, when money equally evolved, money and market are supposed to work and keep dynamic connections with each other—and that will be our another history of money. The economic system concept is also here involved in a similar dynamic with money and market.

Secondly, let us briefly analyze the above content ofthe manuals’ assertion about the history of money. Manuals say that barter could meet the money alternative, whereas money has no alternative, as a market exchange tool, a fact partly explaining one of the above described paradoxes of money—the one that money looks endless life. Or, this is certainly true—as true as all assertions of the basic manuals of economics.

Nevertheless, there is not to be omitted, when talking about manuals, that the same manuals are specifically required to collect a considerable amount of truths on a very large scale of debate, but within a limited paper dimensions, as acceptable for all manuals. What I here mean is that this above truth stays very general and as limited as getting superficial at deeper sights and analyses, even threatens by fallacies. Or, this is what our history below will try to offer: a detailed description about the passage between no money (barter etc.) and money, as watching barter and the whole natural economy description and followed by the real money development in the modern times.

0.3 Money, versus no money

And finally, let me have a brief description of facts that will be detailed in the paper below. There will be first about "barter preceding money. Or, there comes a debate in the literature. There are authors simply admitting this (Davies 2002), whereas others argue that contrary to popular conception, there is no evidence of a society or economy that relied primarily on barter’ (Mauss 1925, pp. 36-37). This primary historical aspect actually introduces the so called gift economy in the early times. So, there is one more reported system to talk about: besides the barter versus money report, the gift economy versus the barter one. There might be seen a more complex reality coming even in the early times, for which the popular view might have thought that things were enough simple, as compared to the modern world days. Barter had not only the money alternative

Another aspect coming on barter is bringing even more complexity in. This might be about at least two successive (but distinct) stages of barter. The first might be figured out for the early days of goods encountering each other within the market space, as trying to build up a price system including all of these—we can call it the primitive barter, despite that literature keeps silent about such a distinction.

The next barter stage, more debated in the literature, has already been called the commodity money one—some selected goods were getting used as medium of exchange. Or, there are some new aspects to debate about, some of them interesting enough as challenging the general truth exposed above. The medium of exchange was, first, supposed to be a good becoming traditional in its exchange, here meaning an important time-interval to be admitted since the primary barter time. Then, authors say all goods have played such a role (Guitton & Bramoulé 1987). But concomitantly, the commodity money was becoming a much different system, differently working, as compared to its precedent of primitive barter, while similarities with the primary barter stay in its direct current operating.

The above controversy about no existing reference about barter just evaporates, since barter meats both an inferior (primitive barter) and an advanced stage, the last represented by commodity money. Then, even the all goods . . . stage was coming to be replaced, in its turn, especially in the metals era.

Metals—as replacing shelves, cowries, green ochre as on a long list of items—for medium of exchange on market were working in the bar form (in the ancient Egypt) and later on paved the way for the activity of coinage. Coinage was not money yet—as much as banknotes in China certainly were (Davies 2002) —, but this way the commodity money period was (slowly, but certainly) approaching the next stage of money. It is through the metal medium of exchange that barter not only proven a more complex system than earlier thought, but also the idea of barter, versus money was vanishing, as similarly to the one of no reference for barter. A more obvious separation, instead, appears rather between the two of barter stages, whereas in reality these were preserving in common a unique market exchange principle in the absence of money.

Coinage was preceding money and money shown up some six-seven centuries BC, in Lydia (Turkey), and much later on, in the Roman Empire[7], it was starting an uninterrupted career up to the modern era. But the most important aspect here coming is that whether there can be identified, at last, the moment of replacement of barter by money, as above asserted by manuals. No, there can’t, but things are more and more complicated.

Money historically began by a lot of different signs in different parts of the world. They were all metal based and up to the flat coins they passed through other different stages. Even the flat coins were different metal

based in a moment in which the most certainly reached point was not yet the one of money replacing barter, but just the one of metals replacing the other commodity money. Gold and silver were becoming token coins since early times, but the gold standard and bimetallism were yet far away, as concepts of the modern era.

So, what was really happening in the metal based medium of exchange and early money era? In our view, as the very finding of this paper, there is to talk about a large selection process between metals and their precedent mediums of exchange, as later on, among individual metals, in similar conditions. It was a kind of a suigeneris market competition. This selection process finally leads to the bimetallism and gold standard of the modern era (see Part Four below). And let us stop a bit to think about this.

As time as the commodity money had been so plural, from the very beginning, there were many mediums of exchange and so each of them a partial one. At the opposite side, gold was just one medium of exchange and standard of value, so a general medium of exchange, in the modern era. Some times—as detailed in the below paper—the gold standard was completed by bimetallism. Or, that was proving that the selection process of the mediums of exchange was continuing—and there was played between the gold and silver metals a kind of a final game. It is also true that the bimetallism was representative for other aspects as well—the analysis in the below text will provide details about.

Or, the economic history here proved to have a real sense, and even as starting from a so earlier historical time—this is rare that economy moves into a single sense for so long centuries and even millennia. But, besides, in the same modern era the gold standard was international, meaning at least another two aspects. Both are linked to a process regarding not money or the mediums of exchange, but the market issue. First, the selection among the mediums of exchange and market extending from narrow to larger areas were parallel in time. Authors notice that, for instance, this selection was relatively quick in time—if it was so, that was enough beneficial for different market spaces to unify between[8].

When international gold standard was in place, market was Ricardian[9](international) and post-Ricardian[10] (national and international) structures. Gold standard has got helped by the international economy. And that

because, second, the advanced market economy of the 19th century was requiring a unique standard of value (Marx 1958). In reality, as much as the economy of the 20th and 21st centuries were later coming to encounter hard inflationary and money devaluation pressures, the economy ofthe precedent 19 th century was still fighting with the money signs plurality engendering a vicious plurality of price systems on the same market spaces.

Now, the answer to the above question: it was not money leading the economic game since the antique Roman Empire to the British modern Empire, but still the barter system—that is the continuing selection of the mediums of exchange process up to the international gold standard era. The gold metal won a large scale championship certainly by some qualities that it proven, qualities meaning both nature (physical and chemical properties[11]) and economy (high value by unit of quantity, due to high extraction costs). It is also true that the same gold standard then was also helped by the existent modern economy to stay stable also for a good while.

Despite some marginal remarks, the literature fails to make obvious that the essence of the specifically barter selection among the mediums of exchange was properly and well understood. In our view, unlike the primitive barter the commodity money brought in a specific market contradiction, as counteracting the new advantages, as reached. The individual commodity money was a market good, on the one hand, serving as a medium of exchange due to its natural value, as resulting from its natural utility; on the other hand, the medium of exchange acts like a new artificial utility, undermining the natural utility and its primary natural moving way (flow) on market¹²[12]. Not too many qualities were proven by the commodity money items, as for mediums of exchange. Even metals, later on, were finishing one by one by exceeding market supply, so decreasing marginal utility.

We then can assert that the gold standard was coming to be the last and highest stage of the barter system. It equally helped building the modern

monetary and financial system, as both national and international, so its exemplary stability might have arisen from its double reality, as barter and (modern) money. In such conditions, only with the gold standard money replaced barter, in a much complex economic and historic reality.

0.4 The gold standard and international monetary system (IMS)

Once more, the money’s lifetime shares into the earlier (non-modern) and the advanced (modern) periods, as previously the barter system had similarly done. As a common feature for all money, it assumes a monetary system (primitive or modern), as much as the seniorageconcept[13], a monetary policy of the issuer, as well as the link between the monetary and the fiscal and State budget policies. The passage between pre-modern and modern monetary systems is not only the one to the national-international status of money, but also the one of money joining credit., and, so, the banks.

As for money matter—so, leaving the barter conditions, as devolving from—the modern gold metal based money is compulsory both national and international. As national, the monetary system was basing on the State’s commitment on exchanging each unit of currency into a declared and fixed quantity of metal—and this was supposed to be ensured through the institution of minting (Part Four). Besides, the State accepted the free gold market in the area, as well as the whole home free market. The freedom of the gold market was even extending to all quantities of gold passing over the national boundaries. This was the synthesis of every State enacted monetary law basing on the gold standard. Or, there is to be noticed that such State monetary laws might be differently reported in facts, as much as their principles were remaining exactly the same—none of the few principles applied could here be escaped or, on the contrary, enriched by supplementary ones.

On the other hand, the international gold standard was claimed to have formed the first international monetary system (IMS). This is equally true that the issue of gold based IMS brought in the highest controversy point in the literature. As for instance, the British philosopher and economist David Hume was explaining the gold capacity in such a way (Jinga 1981), whereas David Ricardo, in the next generation of British scholars, was mentioned as part of a project of replacing gold, as basing prices(Rist 1938, p. 380-381). This Hume-Ricardo controversy of the late eighteenth and early nineteenth centuries lasted up to late twentieth century, as between the French Jaques Rueff—in favour of remaking the gold standard— and the American Robert Triffin—for an IMS without gold (Meutey 1984).

But, what about the concept of the IMS, as introduced into debate by the one of the gold standard? This is containing several components like: (1) one single basic value, as stable and reliable for all prices developing within; (2) a mechanism working for the external equilibrium of each national economy (see, the external balance of payments/EBP equilibrium); (3) a State’s engagements for keeping the monetary gold standard principles; (4) as consequently, the money exchange rate, as fixed, and (5) no monetary policy, in the sense of controlling the money supply.

As for the mechanism of the EBP equilibrium, it is the so called price-specie-flow mechanism explaining it for the gold standard, as through the correlation between the EBP disequilibria and domestic prices behavioural reaction, as expressed into the price of gold and skipping any presumable exchange rate movement. In the Hume’s theory (Jinga 1981), the exchange rates were fixed by definition—as expression of fixed ratios between quantities of gold basing the money units of each State —, the price movements were acting on the short term within the economy, whereas the EBP plus and minus sold was influenced and moving on longer periods. The author was here recognizing the difference between the three dynamics of stabilizing: the exchange rate one, as instant, the EBP one, as on medium-long terms, so defining rather a convergence trend in time, and the price one, as devolving equally from the gold standard relation to barter and the EBP equilibrium remade. Of course, the theory was controversial from the very beginning. But whether the gold standard quite looks like described by its adepts, there comes the interesting aspect that its macroeconomic type equilibrium ensured get similar to the much later on picture of Jan Timbergen (Hardwick 1992), except for the labour market component.

The gold standard was not linearly evolving. It passed from barter to money, the money and monetary system brought the modern financial system in—here including the currency and foreign exchange markets —, it strengthened by its international dimension and finally was agreed and supported by the great British Empire (see Part Four). Besides, during at least the nineteenth century, it was a real culture: Marx (1958) was obsessed by a basic value source, as for a left side political culture and philosophical system[14], whereas the opposite liberal thinking here, in this monetary system, saw the non-intervention and free market competition picture. All the people of this century thought they had the value substance in the gold money that they were carrying or stocking. And all these seem enough consistent with that the same gold standard stays related to all there had been market related economy every since the ancient world.

0.5 Money out of its metal base: IMS, floating, banking system and currency areas

The gold standard came to be destructed as world-wide by the big economic crisis of 1929-1933—some authors, on the other hand, even accuse it for having provoked this crisis[15]. The great economic powers at the time, Great Britain, France and the US have left the system between 1931 and 1933. The gold standard era was going to be followed by what was called international monetary disorder[16], for which the main symptom was the floating exchange rates. The human specie was going to encounter a Second World War in the next fourties. But what was important is the fact that the international economy could not stand the floating exchange rates and preferred a new IMS, even a differently built one. Nevertheless, the second IMS[17] (1944-1971)[18] was built on the same above IMS theory requirements: the basic value became the US$, the EBP equilibrium was coming to be ensured by the specialized institution of the International Monetary Fund (IMF) and the exchange rates were fixed, as by international rule, controlled by the same IMF. The new IMS was supporting much larger money and capital amounts transferred among the member countries, as compared to the previous gold standard (Triffin 1964).

A huge amount of internal contradictions during its two and a half decades time was then undermining and destructing the IMS of the Breton Woods Agreement (1944). The result apparently was similar to the precedent one of some four decades earlier: the exchange rates came back into a new floating era. Results were different on the longer time, but just remember that there was already about the money era—the true money, as getting off their metal base for good. Projects on remaking the IMS, as the real international money order ensured, were coming up, some of them with interesting points, but the development on the ground was going to be different this time—the fixed exchange rates hypo these was getting controversial itself, as of principle.

Money out of gold was floating value as of principle, as much as the gold money had been, on the contrary, fixed exchange rates as of another well defined principle. Each national currency reflects a matrix of home prices and prices are freely moving as of principle equally, in the new modern economy. As the result, no more chance for a new IMS basing on the same fixed exchange rates. So that, similar constructions to the old IMS were weakening their bases—nevertheless, the European example for the European Monetary System (EMS/1979-1999) deserves to be also here considered (see Part Five). In such circumstances, the floating exchange rates is no longer a monetary disorder symptom, but as appropriate to the postwar period, as the fixed exchange rates had been appropriate for the previous gold standard era.

But, first of all the postwar monetary system of all modern States was coming to reach a new formula: it is about the home banking system, basing on a central bank, among and versus the plurality of commercial banks. The last develop a much larger area of business, as compared to the same banking activity in the previous gold standard, plus competition among banks reinforced in a similar pace. The central bank is a new non-liberal formula which proven appropriate to the new economic world. It cooperates with all commercial banks on the base of managing the monetary policy[19]— the money issuer and the home price stabilizer is comprised by this new concept. The (big) central bank is the very retort of the (little) minting house of the gold standard, when there was no monetary policy, as in the current definition of it (Part Four). The minting house was just transforming (turning or tailoring) the money demand into money supply, and so did not control the money supply in the area—on the contrary, the central bank is issuing money according to its own formula of the needed money supply.

Moreover, the central bank both strengthens its power in the new banking system—since the commercial bank cash flow becomes more and more complicated and makes banks vulnerable—and serves its monetary policy objectives of managing money supply and price stability by a set of instruments, as the interest rate, bank reserves, exchange rate and open market operations.

Back to the international area, since the sickness of the IMS theory, face to the new context, in mid eighties the international money did look to start remaking its order—see, tempering the exchange rate floating—in the absence of an IMS and gold metal constraint on money issuing, in the previous definition. See the La Platza-Louvre Agreement (1985)[20], as international, among the central banks of several important States, just for intervening in favour of diminishing the exchange rates floating—and it was a real success. But, just notice some more aspects about this event (Part Five).

First, see the international formula and arrangement, as a very retort to the precedent Breton Woods Agreement. Situation was different after four and a half decades: the States were giving up any propensity for a new IMS—see, a new control about international money—for an arrangement on a much narrower scale. The new context was becoming much more liberal and States obviously preferred to limit their interventions in the area. But this was the result of a reducing floating, as compared to the early seventies, when—as similarly to the early thirties, in the aftermath of the gold standard bankruptcy—floating was a new monetary shock, as international.

Second, at the time of the new successful Agreement, as much as previously, in the early seventies, the exchange rate floating concept rather limited about the US dollar depreciation, as against the other important currencies. In reality, once the dollar depreciated, the very problem was passing on the other national economies’ condition. With or without IMS, the US dollar was staying as the nominal anchor of all national currencies and prices world-wide. On the one hand, this is the common unique basic market value, as common to all modern market, as money of barter based and pressures on the dollar stay very similar to the ones of the former mediums of exchange in the advanced barter system.

Third, the floating was strictly regarding the dollar, versus other important currencies, so that these important currencies were successfully supporting the rest of international money substance. The substance of the floating phenomenon is not hanging on all national currencies, but it restricts to just a few of them—so, there is to imagine here a kind of retort to the previously defined IMS construction: a kind of a "tree-shape international money construction, for which dollar might be the trunk and some of the important currencies stay dollar-based like the basic branches. Finally, the basic-branches" of the international money-tree were basing all the rest of national currencies, as less important individually—as for the principle defined as each national currency meats the system just basing on other national currencies.

The tree-shape construction is equally connected to another important aspect of the today international money, when the coming question is: what is the significance of the basic money branches? In other words, how do the dollar and the other currencies become important? The answer is given by another theory as proven able to successfully replace the one of the IMS—this is the optimum currency area (OCA) theory (Robert Mundell 1961 and Ronald McKinnon 1993). A currency area is formed as an international region around a strong national currency with international status and movement, called, as already above, a nominal anchor—all national currencies get anchored on, whereas the same nominal anchor produces a regional price system. The currency area is a multi-country region of stability in terms of prices and market flows, with appropriate consequences on costs, wages and labour internal migration and it becomes optimal when such benefits overpass corresponding costs. An OCA is, though, limited life, due to the market pressures on both the nominal anchor and the country-anchor, as issuer of this freely moving value in the area.

In such conditions, there is not—according to authors—about the IMS, its States’ engagements and compulsorily fixed exchange rates to talk about, but about properly building OCAs. Plus, authors give some more explanations about the international money working. As for instance, they so explain why each IMS had fallen once and that due even to the country-anchors which previously had supported the same system.

Moreover, the Breton Woods IMS was once an OCA of the US dollar, as similarly to the OCA of the pound sterling bankrupted in early thirties.

The international money disorder results, in general terms, from the nominal anchor bankrupted as such—and not automatically from no-IMS. And so, the OCA supporters get on the side of the adversaries of the gold standard theory and concept—they argue that the pound sterling OCA was the real international gold standard instead. The pound sterling failed as world-wide nominal anchor, in 1931, but the British currency then reduced to the same qualification on a narrow international area including some of the British colonies and the Commonwealth.

The OCA might extend world-wide or shrink to some regions—here recall that the gold standard had kept its extending trend, according to its previous theory, so the OCA terms were finding the international money factor as equally able to divide the world market area into separate regions. Once in the past, the gold standard was supposed to support globalizing, whereas now, in the postwar period, money was failing of supporting globalization—the last was elsewhere based, in the financial world, as a separate one.

On the other hand, since 1971—the bankruptcy of the Bretton Woods IMS—the OCA moved from world-wide to narrower region-wide extents, as the result of some national currencies reinforced through dollar national reserves (see the model common to the Japanese Yen and the Deutsche Mark) and of remaking the old currency areas of pound sterling and French Franc. Besides the US dollar—as preserving a large area world-wide, despite the IMS fallen —, the Japanese Yen, Deutsch Mark, French Franc and Pound Sterling were forming their currency areas on the world map (see also Guitton & Bramoulé 1987).

There are reported some dynamics and events in this picture of the monetary world after seventies. Once, in early seventies, the international oil crisis equally produced a phenomenon of leaving a currency area for another one—this was the case of Kuwait, as leaving instantly the pound sterling area for the dollar one, when the country adopted the dollar price of oil (Guitton & Bramoulé 1987). Two decades time later, in 1991, the ex-Soviet Russia did the same with its own oil and gas reserves, ending the former trade agreements with the ex-communist countries in the Eastern Europe area—the result was similar to what had happened in Kuwait earlier, but much extended on several neighbouring countries of Russia: Ukraine, Moldova, Poland, Romania and Bulgaria. Then, Bulgaria, in its turn, encountered a severe financial crisis in 1995-1996, and decided to adopt the extreme political measure of Monetary Council (Andrei 2005)- so depriving the central bank from its monetary policy competence, but equally leaving the US Dollar area for the Deutsche Mark (DM) one. Later on, in the early two thousands, all Central and Eastern Europe countries, as subjects of the European integration were leaving the dollar and DM areas for the Euro currency area.

0.6 The postwar Europe: a special case

But for Europe, as a special economic area, the most interesting events were coming on the West side. The Western Europe had been integrated into the European Community since the end of the World War II. Much later on, in 1999-2002, the first common currency (the Euro) was ever implemented world-wide, as a result of an advanced integration process that the European countries had freely agreed to build. Europe was so becoming a kind of a different economic world and economic model. Plus, the old iron curtain fallen helped the rest of the European countries to join the western origin European Union.

In reality, Europe was different even before these events of the twenty-first century. A common currency for several nations is certainly a newly interesting subject of debate, but such an undertaking dates from the early seventies and the Breton Woods IMS falling, once more. When the