Talk:Sterling area

Re-write
I've re-written this to remove some rather unrepresentative and parochial examples of currencies leaving the zone and to give a better history of why the Sterling zone effectively ended in 1972.BaseTurnComplete 10:17, 24 April 2006 (UTC)

Another British Empire trasher-"Britains decline as a world power-"well ,into third place actually- not bad for fifty millions out of five billion-and only after 450 years at the top!!! However it might interest somepeople that sterling was-right up to 1970 or so -the main trading currency of the world-out side America... As it is the fourth most important currency still -in 2006 thats not bad......In relative terms the British are still at the top ,currency wise as in everything else!!!

I think I will have to put this into the main article sometime


 * Empire trasher? In the twenty years or so after WWII Britain went from a superpower to a second-tier power, militarily and strategically.  That's a fact and is a clear decline in my book, albeit a decline from the top.  By the way, I'm a Brit and view our imperial history in a very positive light.  But being a Yorkshireman, I call a spade a spade.  Just in case there are many more sensitive souls like you I've inserted the word "relative".  Please sign your comments in talk! BaseTurnComplete 13:41, 16 July 2006 (UTC)

Query
What happened on that day in 1972? A devaluation on the part of British pound sterling? Should the Irish Pound be in this list? Morwen - Talk 18:18, 15 March 2006 (UTC)
 * Apparently, the pound was floated. Warofdreams talk 02:08, 17 March 2006 (UTC)
 * Well, the pound was effectively floated in 1971 with end of the Bretton Woods system. However Britain didn't move too quickly to float its currency away from the dollar due to the major negotiations about EEC membership that were ongoing. In fact the reason why Sterling floated from the dollar on June 23 1972, and why so many other Sterling area currencies floated from Sterling, was that the effective ending of the Sterling area (with the exception of a few dependencies like Gibraltar and Jersey) was a requirement of Britain's entry into the EEC on 1st January 1973. The Irish Pound should be on this list, as it was pegged to sterling until the early 1990s.BaseTurnComplete 20:47, 22 April 2006 (UTC)

Malta
The Maltese pound/Maltese lira should be included here. --Rumping 11:25, 19 October 2007 (UTC)

Iceland
Some of the links from such as  suggest that Icelandic króna should be included. --Rumping (talk) 08:52, 19 November 2007 (UTC)

Yes. Iceland was a member. George Smyth XI (talk) 06:21, 29 March 2008 (UTC)


 * From when to when? At what value?--Rumping (talk) 17:49, 1 April 2008 (UTC)

Rumping, Iceland was a member from the outset in 1939. It was still a member in 1972. I don't know what they did after 1972. As to what value they pegged their Krone to the Pound Sterling in 1939, I don't know.

You must remember that the 'sterling' area was a very informal grouping with no formal rules. It's purpose disintegrated once the individual members realized that now that the gold standard has gone, they can experiment with their own monetary policies.George Smyth XI (talk) 07:08, 9 April 2008 (UTC)


 * Looking at, it says "Prior to independence in 1918, Danish currency was used in Iceland. The Icelandic Krona was introduced on December 1, 1918 at par with the Danish Krone and became part of the Sterling area with 1 Pound Sterling = 18.1595 Kronur, falling to 22.15 Kronur in October 1925, and 27 Kronur on April 15, 1939. The exchange rate was set at 1 U.S. Dollar = 6.49 Kronur on September 20, 1939, falling to 9.34 Kronur on December 20, 1949, 16.29 Kronur on March 20, 1950. The dollar exchange rate has been calculated by using the pound to calculate the cross rate. From March 8, 1951 on, a multiple exchange rate structure was used until February 20, 1960 when the exchange rate was reestablished at 1 U.S. Dollar = 38 Kronur, falling to 43 Kronur on August 4, 1961, 57 Kronur on November 27, 1967 and 88 Kronur on November 12, 1968. A new Krona equal to 100 old Kronur was introduced in 1981." I have edited the article assuming you are right, taking 2.4*88 to be the rate in 1972. --Rumping (talk) 22:53, 9 April 2008 (UTC)

Rumping, I have looked at your source. The sterling area only came into existence at the outbreak of world war 2. So whoever said that Iceland joined the sterling area in 1925 was getting confused about the meaning of the term. In the early part of the 20th century, many countries pegged their currencies to sterling as it was the world's number one reserve currency but that didn't imply membership of the sterling area. The term 'sterling bloc' is perhaps the more accurate term for countries who pegged their currencies to sterling.

If the Iceland currency switched its peg to the dollar in 1939, this was only semantic since the dollar and the pound were pegged to each other at the time. Indeed your reference did state that the dollar/krone rate was worked out through the pound cross rate.

At any rate, one shouldn't lose track of the fact that the main feature of the sterling area was the fact that all the member countries operated mutual exchange control laws for the prevention of capital flights outside of the area. For this purpose, Iceland was unequivocally a member and Iceland can be seen listed on the exchange control legislation of all the member areas.

When the sterling area came about at the beginning of world war 2, many countries that pegged their currencies to sterling did not actually join the sterling area. Outside of the British Empire countries, I can only think of Iceland and Libya. George Smyth XI (talk) 04:19, 10 April 2008 (UTC)

On reflection, my guess is that Iceland pegged to sterling in 1925 when sterling returned to the gold standard. Many countries used to peg to sterling as a means of pegging to gold. It was known as the gold exchange standard.

However, when Britain finally abandoned gold in 1931 it left alot of confusion. It was uncharted territory. Nobody knew what money meant anymore. And so countries who had pegged to sterling were confused. In the end they just continued to peg to sterling until they had time to think the whole matter over.

It wasn't until the 1970's that countries increasingly began to experiment with their own monetary policies and float their currencies, or experiment by pegging with the US dollar instead. George Smyth XI (talk) 15:25, 10 April 2008 (UTC)

Map
the map is unclear, sow many reds sow simil, is not easy to see or read, i thinz red to blue, cross for pink and violet/purple, actual red-red deep-red too deep-purple is hard--201.255.30.43 (talk) 06:11, 1 February 2008 (UTC)

USSR
Perhaps something should be said about how the Soviet ruble was pegged to the pound from 1961 until the Union's collapse. 130.195.5.7 (talk) 00:06, 14 March 2008 (UTC)


 * I'm not sure whether or not that is true. But if it is true, it has no bearing on the sterling area. Many countries simply voluntarily peg their currencies to one of the world's leading reserve currencies. During the Bretton Woods period, it made no difference in practice whether a peg was to the pound sterling or to the US dollar, because the pound sterling was pegged to the US dollar anyway. David Tombe (talk) 11:19, 15 November 2008 (UTC)

The relevance of the EEC
Can we please see a citation which proves that the accession terms to the EEC made it that the UK had to abolish the sterling area. The newspapers of the time said that the decision to float the pound in June 1972 and to impose exchange controls on the overseas sterling area countries was due to large capital flights. George Smyth XI (talk) 06:41, 29 March 2008 (UTC)

Confusion between two topics
Whoever first wrote this article has got confused between two topics. These two topics are,

(i) The Sterling Area. (ii)The Rise and decline of Sterling as the world's leading reserve currency.

Although inter related, these are two different topics.

The Sterling area was a war time emergency measure. But the reason why such an area should have been deemed necessary does indeed relate to the role of sterling as a leading reserve currency.

However, the decline of the sterling area was mainly because the second world war was over and everybody was beginning to protect their own currencies. The collective desire to protect the external value of sterling during the war had lapsed.George Smyth XI (talk) 09:37, 29 March 2008 (UTC)


 * It's true that in the 40 years of sterling area from 1939 to 1979, that sterling fell from being the world's leading reserve currency to being the world's number two reserve currency. But this really had no bearing on why these war time emergency measures fizzled out. George Smyth XI (talk) 15:29, 10 April 2008 (UTC)

Sterling Coins
The history of sterling itself goes back many hundreds of years before the spread of sterling coins to some parts of the British Empire. And the issue of regional versions of the sterling coinage only came at the tail end of the relatively short period of history in which sterling coins were used in the overseas empire.

Most of these overseas territories had already stopped using sterling coinage prior to decimilaisation in the UK in 1971, and some of these countries only began to issue their own versions of the sterling coinage because of a break in parity between the pound sterling and the local pound. The list of these countries includes Australia, New Zealand, Fiji, South Africa, Rhodesia, British West Africa, Nigeria, Gambia, Malawi, and the Republic of Ireland.

Since decimilisation, St. Helena, Gibraltar, and the Falkland Islands have been issuing sterling coinage of the decimal kind.

This topic should not however be confused with the sterling area topic. David Tombe (talk) 17:37, 14 April 2008 (UTC) 93.97.194.138 (talk) 05:04, 23 June 2009 (UTC) I have added a paragraph on the EEC reason for the abolition of the sterling area. It is based on personal knowledge from the time. I was covering the negotiations on British entry for na British national newspaper at the time.

Purpose
Was the sole purpose of the Sterling Area to protect sterling? I can imagine this was seen as quite important in 1939 when Britain was at war with Germany, but the thing continued for long after that. Many countries now peg there currency to the Euro or the US$ for their own interest. Yaris678 (talk) 11:51, 23 June 2009 (UTC)


 * Yes, that was indeed the purpose. It was a wartime emergency measure. It fizzled out in stages. But so long as the Pound sterling maintained its fixed exchange rate of $1 = 2.80 to the US dollar then there was not going to be any major incentive to revise the situation. The 1967 sterling devaluation caused a confidence crisis in sterling and many of the sterling area member states did not devalue in sympathy. Meanwhile many member states had already been introducing their own exchange control laws. When the dollar crisis arose in 1971, some sterling area states decided to devalue with the dollar. The final death knell came when the United Kingdom introduced exchahnge controls on 22nd June 1972 ostensibly in order to prevent capital flights to the sterling area. That was to all intents and purposes the end of the wartime emergency measure. The wartime emergency had now been superseded by another kind of emergency, and we entered into a new era. David Tombe (talk) 23:54, 24 August 2009 (UTC)

The end of the sterling area
That table at the end of the article is going to have to be revised. One column is for the leaving date. However, it is not easy to define a definite leaving date in many cases. The sterling area was somewhat unregulated. It was more an understanding between a large group of countries, nearly all in the British Empire, rather than a formal currency union. Only a small number of countries actually left (or were expelled from) the sterling area prior to 1972, when the arrangement essentially came to an end. It is awkward to have a column of all the territories (about 67 in total) and ascribe a leaving date. The date could mean the date that the particular member decided not to peg its currency to sterling anymore, or it could mean the date on which a particular member changed its own exchange control laws into non-sterling area based laws. Or it might even refer to a time when a particular member decided to switch its reserves to another currency. At any rate, in most cases, 1972 is essentially the end date. Some countries did linger on for a few years with residual aspects of their sterling area days, with Brunei not amending its sterling area exchange controls until the year 2001.

That leaving column might best be extinguished, or clarified. Two columns might replace it, one for exchange controls and one for pegging. But It's going to be difficult to ascertain 67 dates for each column. David Tombe (talk) 00:06, 25 August 2009 (UTC)

The full list of members
It's better to have no information than wrong information. So I've temporarily removed this table here for repairs. What is ideally needed is a full list of all countries that were ever a member, with the date that any of them left or were expelled before 1972. There is no need to mention their individual cirrencies because often that changed over time. Here is a copy of the table that was on the main article.

Former members
This table below and the map image have been removed because they both contain misleading information. The map image did not include British Honduras, British Guiana, or the British West Indies. It also gave the impression that some countries left in 1972, and that there was still spome kind of residue in existence in 2007. The table gives the false impression that the sterling area was something that countries left by virtue of replacing the sterling currency with a new currency. The entire significance of the sterling area has been lost with the table below. The sterling area ended on one date in 1979. A small number of the members left before that date. The significance of the year 1972 has been misunderstood. The 'overseas sterling area' still continued with most of the members between 1972 and 1979.

David Tombe (talk) 13:56, 25 August 2009 (UTC)

Canada and Newfoundland
It states in the main article that Canada and Newfoundland didn't join the sterling area because they had no vested interest in doing so. There is certainly a strong element of truth in that, but that might just be the cover story. Canada did operate wartime emergency exchange controls until 1953 and they were sterling area friendly. Canada was as concerned as the UK was about capital flights to the USA. My suspicion is that the real reason why Canada and Newfoundland were not members of the sterling area was because London feared that they would be a back door for capital flights to the USA. But after years of research, I have never heard a definite statement regarding why Canada and Newfoundland were not in the sterling area. It may well be as simple as the fact that since they had no vested interest in being in it, and it suited London that they were not in it, that the matter was simply decided on a gentleman's agreement. Any sources regarding this matter would be welcome in order to help elaborate on this point in the introduction. David Tombe (talk) 14:05, 25 August 2009 (UTC)

Material not suitable for this article
This material,

==Imperial currency==

There was no single imperial currency used throughout the British Empire. In 1825 however, the British government did try to introduce British coinage to all its colonies. The implementation method was largely ineffectual and stricter measures were introduced in 1838. This time, the British North American colonies were excluded from the measures due to recent minor rebellions in lower and upper Canada.''

''As a result of the 1838 measures some areas of the British empire adopted sterling as their local currency. These were notably Australia, the southern and western African countries, Jamaica, Bahamas, and Bermuda.''

''India was unaffected by these measures because at that time it was ruled by the East India Company. Hence a large Rupee zone prevailed within the British Empire involving India, Burma, Ceylon, East Africa, Mauritius, the Seychelles, Aden and the Persian Gulf states on the east coast of Arabia.''

A Dollar zone operated within the British Empire principally in Canada, Newfoundland, Hong Kong, The Malay States, British Borneo and the Straits Settlements.

Today, the only territories that use sterling currency outside of the British Isles are Gibraltar, Falkland Islands, South Georgia, British Antarctic Territory, St. Helena, and Ascension Island.

''Gibraltar, St. Helena, and the Falkland Islands all issue their own sterling bank notes and coins. The St. Helena versions are used on Ascension Island, and the Falkland versions are used on South Georgia. British Indian Ocean territory officially uses sterling but in practice the US troops based there use US dollars.''

Within the British Isles, but outside the UK, sterling note and coin varieties are issued by the governments of Jersey, Guernsey, and the Isle of Man.

''It should also be mentioned that in the latter part of the nineteenth century, the British government conceived of a scheme to make the gold sovereign the imperial coin. To this end, branches of the Royal Mint were established at Sydney and Melbourne in Australia. However, in British empire countries such as India, that didn't use sterling coinage in their local day to day transactions, the gold sovereigns possessed by the treasury seldom if ever left the vaults.''

This material is not directly suitable to this article and hence it has been brought to dry dock, pending the opening of a new article entitled "Currencies of the British Empire". David Tombe (talk) 14:05, 27 August 2009 (UTC)

South Africa
Page 35 in this link shows that South Africa did not leave the sterling area in 1961. It left the Commonwealth that year, and it changed its currency unit from pounds to rands, but it didn't leave the sterling area. https://abc-economie.banque-france.fr/sites/default/files/media/2021/06/10/gdre_avaro.pdf 2A00:23C8:4DA4:5F01:E8B3:7136:4069:B40 (talk) 18:52, 5 April 2024 (UTC)