Globalization 2.0: the geopolitics of the U.S. Exchange Stabilization Fund, 1934–45

This article adopts a historical perspective to examine the geopolitical dimensions of monetary policy, focusing on the 1930s. During this period, Stabilization Funds were established to promote exchange rate stability as nations abandoned the gold exchange standard. These entities intervened in foreign exchange markets and extended stabilization loans to other countries. This article analyses the experience of the U.S. Exchange Stabilization Fund (ESF), situating it within the broader context of global economic fragmentation and the formation of currency blocs. The analysis reveals that rivalries with foreign powers significantly influenced the outcomes of these loans, and the political conditions attached to them delineated the boundaries of the expanding ‘dollar bloc’. The U.S. ESF emerged as a pivotal instrument, enabling the USA to secure trade markets while bolstering the war efforts of allied nations.