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The idea of Bitcoin as an internet native currency, and eventually a global one, is coming to life slowly. But historically, the idea of global currency has haunted the world’s financial imagination for nearly a century. 

From Keynes’s Bancor in 1944 to Zhou Xiaochuan’s post-crisis proposal in 2009 to today’s renewed debates, the idea resurfaces every time the global economy fractures. 

Could this time be different with Bitcoin? 

I decided to trace the idea of global currency through several decades and books. I may have missed some parts, so feel free to add. I’ll keep this brief and leave the books I’ve read below.

In the beginning

It all started on July 1, 1944. 730 delegates from 44 Allied nations, including major powers like the US, UK, Soviet Union, China, and France, gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. They spent 2 weeks figuring out how the new international monetary and financial system would be, post WW2

After WW1, the treaty of Versailles was needed, but imposed harsh reparations that devastated economies and contributed to the rise of fascism, such as Hitler, Mussolini and gang. 

So when folks met up in 1944 (WW2 was almost ending), the goal was to prevent another Great Depression, another global conflict and build a stable global economic order. 

2 main proposals were discussed in Bretton Woods. 

1. John Maynard Keynes, representing the UK, proposed the creation of a global currency called Bancor. It will be issued through a global central bank known as the International Clearing Union (ICU).

2. Harry Dexter White, representing the US, promoted a dollar-based system. Countries would peg their currencies to the US. dollar backed by gold. He also led the creation of the IMF and the World Bank.

To understand how both of these proposals work, let's look at an example.

• Country A (Germany): Massive exporter

• Country B (USA): Massive importer

• Country C (Brazil): Balanced trade (imports = exports)

***Based on Dexter’s model and the current USD-based system, ***

Say Germany sells $1B worth of cars to the US. The US  pays in dollars, increasing its trade deficit. Germany accumulates dollars as reserves or buys the US Treasury bonds. Over time, the US continues running trade deficits, while Germany keeps hoarding dollars. Hence the  unsustainable debt of the US. 

***In Keynes’s Bancor system, ***

If Germany sells $1B worth of cars to the US, then the US does not pay in dollars. Instead, the ICU credits Germany with 1B Bancors and debits the US with -1B Bancors. 

The ICU police this. If Germany exceeds the surplus threshold, it pays interest or penalties to discourage hoarding. If the US exceeds its deficit threshold, it is warned to rebalance trade or face restrictions.

Here, Germany is incentivized to import more (e.g., from Brazil) or invest in global development. The US is encouraged to export more or reduce consumption. Brazil, with balanced trade, enjoys stability in Bancor flows and avoids pressure.

The idea behind Bancor was a zero-sum balancing act. No country could become “too big to fail” due to excessive deficits. But it was too complicated and idealistic in assuming every country could maintain balanced trade. 

Dexter on the other hand had a few tricks up his sleeve. In the end, Dexter’s USD dominance proposal was adopted. 

The Bretton Woods system established the US dollar as the central global currency 

Why did dollar dominance win over Bancor?

Simplicity often wins over complexity. But more so ICU felt too centralized, asking nations to surrender economic autonomy to a global body. That didn’t sit well in a post-war world where sovereignty was non-negotiable. That and idealist economic trade balance views. 

Dexter’s dollar-based system on the other hand wasn’t fair play at all. It was centralized and authoritarian in its design. 

So how did Dexter pull it off?

They had gold. They were ahead in economic recovery.

And they had nuclear weapons. 

At the time, the US held nearly 2/3 of the world’s gold reserves. It was a significant advantage in advocating for a gold-backed dollar as the bedrock of global trade. 

The US proposed a fixed gold peg at $35 per ounce.

From a broader geopolitical backdrop, the global population in 1944 was about 2.3 billion, a fraction of today’s 8 billion. The world was far less interconnected. The war had devastated Europe, Russia, and much of Asia. Infrastructure, economies, and entire cities were in ruins. The US, by contrast, had faced far fewer casualties and damages. Being geographically isolated, it had minimal domestic losses, around a tenth of what Europe suffered, and its economy was poised to rebuild faster. 

But gold dominance and economic recovery alone didn’t secure US financial dominance.

American scientific breakthroughs had already signaled global power. Physicists like Leo Szilard and Albert Einstein, who had fled Europe, helped develop nuclear weapons. Their intent was deterrence, not destruction. But once the bomb existed, it changed geopolitics overnight. The US had military dominance. And after Hiroshima and Nagasaki in 1945, it became the undisputed superpower. 

In the end, the USD won and the vision for neutral global currency faded. 

And 20 years passed on…

France sends its warship to the US

Under Bretton Woods, countries could exchange dollars for gold, but the US had been printing more dollars than it had gold to back it. And it used it to fund the costly Vietnam War and domestic programs like the Great Society under LBJ. 

Belgian-American economist Robert Triffin pointed out a fatal flaw in the Bretton Woods system that came to be known as the Triffin dilemma. 

• The world needed US dollars for liquidity and trade.

• But the more dollars the US pumped out, the less credible its gold promise became.

Yet the US kept promising that every dollar was still convertible to gold at $35 per ounce.

French President Charles de Gaulle saw this as financial imperialism. He called it the  “exorbitant privileged position”. The world had to pay for what they bought with the money they have, but not the US. 

So in 1965, France did something unexpected. It sent a warship to New York Harbor to physically retrieve French gold reserves held by the Federal Reserve. 

Would it have escalated to war? Maybe. But likely not. It was perhaps more of a diplomatic theatre and a sovereign flex. France was exercising its right under the Bretton Woods agreement to convert dollars into gold. But doing it with military formality was to send a signal to the world that they don’t trust the US system anymore.

It was one of the first major public blows to the dollar’s credibility. And France wasn’t alone. Other countries like West Germany and Switzerland followed suit, redeeming dollars for gold and draining US reserves.

The Nixon shock

Given they did not have enough gold, the IMF introduced Special Drawing Rights (SDRs) in 1969. SDRs were an international reserve asset, created to supplement gold and dollar reserves. Instead of relying solely on the US dollar, SDRs were based on a basket of major currencies (originally gold-backed but later diversified).

The idea was to reduce the world’s dependence on the dollar and avoid a liquidity crisis. But SDRs were a little too late and a little too weak to solve the underlying problem.

By 1971, the US could no longer sustain the illusion. President Nixon “closed the gold window,” suspending dollar convertibility to gold. 

The Bretton Woods collapsed and this marked the beginning of fiat money dominance.

The French pursuit

While France demanded justice in one corner of the world, the French franc, specifically the CFA franc, has been dominant in parts of Africa since 1945, long before 1971.

After WWII, France created two CFA franc zones:

• West Africa: Communauté Financière Africaine (XOF)

• Central Africa: Coopération Financière en Afrique Centrale (XAF)

These zones included 14 African countries, many of which were former French colonies. France maintained monetary control via currency convertibility guarantees and representation in African central banks. Till today it has influence over these country’s monetary policy.

Colonisation hasn't ended in some parts of the world. 

Did countries stop using the USD after the Nixon shock 1971?

Nope. The US dollar was no longer convertible to gold and it dismantled the fixed exchange rate system. But most countries did not stop using the USD as their dominant reserve or trade currency. There were no decent alternatives. Instead, they floated their currencies or maintained a soft peg to the dollar or a basket of currencies. 

The USD remained dominant in oil trade (OPEC priced oil in USD) - petrodollar deal, global debt markets and FX reserves (central banks kept holding USD). 

In 1997, when many Southeast Asian countries were still pegged to the USD, Soros claimed that SEA will tank. The US further increased its credit rates leading to capital flight and eventual tanking of these countries leading to Asian Financial Crisis '97. Many financial crisis has similar vibe.

The 1999 Euro launch

The idea of a shared currency appeared again, this time through the forms of Euro. It was a mandatory system for member states of the Eurozone, and came with centralized authority, the European Central Bank (ECB), which controlled monetary policy for all participating nations.

At first glance, the euro seemed like a win. It eliminated exchange rate fluctuations, making trade within the Eurozone smoother. It gave weaker economies access to lower borrowing costs and helped Europe establish itself as a financial heavyweight. Today, the euro is the second most-used reserve currency after the US dollar.

But it came at a cost. Countries that adopted the euro lost monetary sovereignty and could no longer print their own money or adjust interest rates to respond to local crises. This became painfully clear during Greece’s debt crisis, where strict monetary policies prevented the country from devaluing its currency to recover. The one-size-fits-all approach meant that economies as different as Germany and Greece had to follow the same rules, often to the detriment of weaker nations. Debt-ridden countries like Italy and Spain were forced into harsh austerity measures because they could not manipulate their currency to ease financial strain. Meanwhile, richer nations like Germany and the Netherlands felt they were unfairly propping up struggling economies, creating political tension across the EU.

In recent years, the euro has faced pressure from global trade tensions, monetary tightening, and geopolitical instability contributing to market volatility and periodic depreciation against other major currencies.

The Bretton Woods 2.0

Believe it or not, after all that, there was a call for Bretton Woods 2.0. Yet another global currency dream.

When the housing market collapsed in 2008 followed by a series of domino effects, global banks froze lending, economies contracted, and panic set in. The crisis exposed how fragile the international financial system had become as it was overly reliant on debt, under-regulated, and centered around the US dollar.

Many countries, especially in the Global South and emerging markets, started to question whether a system built around a single national currency was sustainable. 

China, for instance, had been holding huge amounts of US debt while the US printed more dollars through bailouts and quantitative easing. This created global imbalances as exporting nations were lending money to the US to keep the system running, while taking on the risk of dollar depreciation. 

In 2009, China’s central bank openly proposed replacing the US dollar with a neutral global reserve currency suggesting SDRs (Special Drawing Rights) issued by the IMF instead.

These concerns led to a wave of calls from world leaders for a “Bretton Woods 2.0” ,  a modern rethinking of the post-WWII economic order. At G20 summits in London in 2009, countries like France, China, and Russia pushed for reforms in global financial institutions and more balanced power sharing. 

In the end, the IMF received more funding, and some banking regulations were tightened in the years after. But no real overhaul happened. No surprise there? The dollar remained dominant. 

The foundation of the global economy didn’t change, even though trust in it had been deeply shaken.

The growth of BRICS

In 2023, Brazil, Russia, India, China, and South Africa began discussing the idea of a shared currency or alternative mechanism to reduce the dependence on USD ie de-dollarisation. The sanctions on Russia didn't help. After Russia’s invasion of Ukraine, the US and its allies froze Russia’s dollar reserves and cut it off from SWIFT, the “backbone of global banking communication”. This made one thing clear. If you fall out with Washington, your access to the global economy can vanish overnight.

China’s growing economic power also gave it more leverage to process alternative options. It would trade in Yuan with Russia and Iran.

I know many still say it's at its early stage, but I see many countries hedging their bets quietly and aligning with Putin and Xi. It became more obvious after US imposed tariffs on multiple nations, signaling that economic tools can double as political weapons. The world’s second financial system is slowly forming.

What is the world looking for, for the last century ?

For the last 80 years, from Bretton Woods to multiple financial crises, from the birth of the Euro to the rise of BRICS, through war and peace, we’ve been circling around the same ideal. A global currency that is :

1. Simple 

2. Free from dominant power 

3. Decentralised

4. Borderless

5. Scarce 

6. Transparent 

7. Inclusive, with self custody

8. Resilient in crisis 

9. Built for individual financial sovereignty

10. A new backbone for global finance, owned by no one

It doesn’t matter where you’re from, what politics you believe in, or how your economy leans. The answer keeps pointing in the same direction:

Bitcoin

This is the first true global currency.

And it’s just there 

Waiting...

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Some books that might interest you :

1. The Battle of Bretton Woods by Benn Steil

2. Goodbye, Great Britain by Kathleen Burk and Alec Cairncross

3. The Ghost of Bancor by Tommaso Padoa-Schioppa

4. Confessions of an Economic Hitman by John Perkins

5. The Blood Bankers by James S. Henry