Restoring Sterling after 1945

While the advent of the Eurodollar market greatly increased the international use of the dollar and reduced that of sterling, its effect, inevitably, was to reduce New York’s importance as an international financial centre. Yet why should New York’s loss be London’s gain and not say Paris’s or Zurich’s? The Bank of England (1964: 103) claims that it was ‘an entirely natural development’ for the City to become the centre for the Eurodollar market. Political economist Eugene Verslusyen (1981: 14) agrees, although his explanation is somewhat more illuminating. He sees the City’s position at the centre of the Eurocurrency system as stemming directly from the fact that it became ‘solidly anchored’ in an ‘institutional framework — particularly the merchant banks’, which had ‘reached maturity nearly one hundred years’ earlier. A framework which, against all expectations, ‘reassert[ed] itself’ after 1951.