Abstract
Currency power – the capacity of an international-currency issuer to derive autonomy, influence, and coercive leverage from non-resident use of its currency – is a central but conceptually unstable category in international political economy (IPE), oscillating between identification with foreign-exchange policy instruments, a residual descriptor of a currency’s weight in global finance, and an undifferentiated label for monetary state agency. The indeterminacy has become operationally consequential under three concurrent conditions: the weaponization of financial interdependence, the empirical re-mapping of the dollar’s roles after the 2020–2022 shocks, and renewed structuralist debates on hierarchy in the international monetary system. The article constructs a layered conceptual map in which currency power is derived sequentially from the generic concept of power, through economic, monetary, and international monetary power, to currency power as a relational effect of international currency use. The study employs a critical conceptual reconstruction of canonical and recent IPE and international macro-finance literatures, combined with analytical disaggregation of the functions of international currency and parsimonious reference to BIS Triennial, IMF COFER, and ECB indicators. Three principal results are obtained. Firstly, currency power materializes when non-residents come to depend on the issuer’s currency for payment, denomination, anchoring, reserves, or financial-asset issuance, and is sustained by four self-reinforcing mechanisms – dominant-currency invoicing, banking–trade complementarity, the safe-asset convenience yield, and infrastructural sunk costs – that generate the hysteresis explaining why aggregate metrics resist displacement under stress. Secondly, currency power is a species of international monetary power, but the converse does not hold: the demarcation explains why reserve diversification can affect international monetary power without dislodging currency power. Thirdly, currency dependence, currency hierarchy, currency statecraft, and legitimation are positioned as the user-side correlate, structural crystallization, deliberate strategic mode, and normative stabilization condition of currency power. The framework supplies a precise vocabulary for assessing dollar leverage, sanctions architectures, and de-dollarization scenarios.
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