Overview of topic: Money

In general, the state performs a regulatory function within most economies globally. Despite the language of a “free market”, the state must create and maintain the conditions in which markets can operate in certain ways. Economic activities are therefore regulated to varying degrees even within neoliberal frameworks. But national currencies, though based on states’ monetary policies, are never completely independent given the globalized nature of the world economy.

In contrast to these national, state currencies, regulated by a central authority, cryptocurrencies are not overseen by an institution such as a central bank. A cryptocurrency is a currency that functions in the digital or virtual realms, where transactions are made secure through use of cryptography (meaning the practice of secure communication whereby only the sender and receiver can access the information and currency that constitute the transaction). These currencies operate through blockchain technology, which is a kind of ledger in digital space (Birch, 2020). This technology is decentralized in that it functions through a horizontal network. In theory, the decentralized dimension of cryptocurrency undermines the connection between currency and state institutions. This decentralized dimension to the technology has repercussions for how money moves and is used, and therefore for political power also. Users can engage in transactions that escape the control of the state-led financial systems and can accrue and gather money without the scrutiny of the latter.

There is ongoing debate over the role of cryptocurrencies, with some voices on both the left and right sides of the political spectrum making arguments in support of them. A left-wing claim, for example, suggests they create more inclusive and potentially egalitarian conditions that open up space for ordinary people to participate in markets as economic actors. An argument coming from libertarian and anarcho-capitalist (indicating support for a free market capitalist order without states) spheres is that cryptocurrencies point to the realization of the promise of the free market – markets that can regulate money more efficiently and effectively than states (Golumbia, 2016). For libertarians and anarchists, the absence of the state in the functioning of these digital currencies makes them ideologically appealing.

The decentralization of power within the world economy could have emancipatory or repressive and damaging consequences. For cryptocurrencies to take over from national currencies would involve a disruption to power on different levels and perhaps with unforeseen effects. If there is a growing privatization of money, coupled with its detachment from state regulation, this may open the door to the fullest possible, or most literal, expression of free market capitalism. For libertarians, this is to be welcomed as it could encourage the further privatization of the global economic system, taking responsibility away from national governments to regulate national economies by wresting power over economic decisions away from the state and into the hands of a globally distributed network of anonymous actors. From an anarchist perspective, as suggested above, cryptocurrencies hold the potential for democratizing the global financial order, giving access to ordinary people to participation in markets which they otherwise may be barred from. For those who believe the state needs to manage the economy, whether on the left or right, such an outcome is threatening. Depending on one’s political position, therefore, this scenario can take on utopian or dystopian tones.

Engin Isin (2017) argues that the invention of currencies such as Bitcoin has created new opportunities for individuals to take actions that have international dimensions, acting beyond the confines of the nation-state as Bitcoin allows for users to transgress and potentially subvert the dictates of the state relating to financial transactions. In the following quote, he highlights the subversive opportunities encapsulated by this technology.

Case Study Box 7.1

Arguably, if there was a way to bypass existing financial institutions and transact person-to-person payments, it would be as radical an invention as money itself. Bitcoin ruptures the existing monopoly of financial institutions over transactions by traversing borders with anonymity. Engin Isin (2017) Enacting International Citizenship. In: Basaran, Tugba, Didier Bigo, Emmanuel-Pierre Guittet and R. B. J. Walker (Eds.) International Political Sociology: Transversal Lines. (London, Routledge) 197.

The controversy, as Isin acknowledges, is that cryptocurrencies such as Bitcoin can be used for criminal or illegal activities as well as radical political purposes. Because of their private, anonymous, and decentralized nature, cryptocurrencies can be used to finance crime and support activities that harm or oppress people. Yet, with states and international financial institutions as sites of power that often intersect relating to economic and political avenues of control and domination, these bodies can also prove dangerous to ordinary citizens who try to challenge their power. Isin gives the example of Wikileaks and the organization’s ability to access Bitcoin technology as a case to demonstrate how the latter can nonetheless serve as a means of resistance to global articulations of power.

Despite forces of globalization and the introduction of new technologies that seem to hold potential to undermine the sovereignty of borders, states remain important political actors in the world economy.

Section 1: The US dollar and international economic order


In the post-war period, the United States emerged as the most powerful state economically, with European powers in a state of near collapse after the destruction of the Second World War. The US was therefore in a position to establish an economic system, based on certain rules it set, that gave shape to an international economy which allowed some benefits to those weakened states brought under or consenting to its remit.

This system was brought into being in part through the Bretton Woods agreement, out of which was made the International Monetary Fund and what is now called the World Bank. Part of the IMF’s function was to manage a system of exchange rates and rules relating to how currencies would be measured and regulated. This system was created to privilege the US dollar in that those currencies operating in alignment with the Bretton Woods agreements were fixed in relation to the dollar. The value of the dollar was set in relation to the value of gold.

In the 1970s, the US government stopped fixing the price of the dollar according to the price of gold, which brought certain benefits, for example the government’s ability to devalue its currency. The dollar remains a reserve currency which continues to privilege the US in various ways. It can print money cheaply to pay for goods internationally, for example. With international monetary transactions often taking place in dollars, companies in the US doing transnational trade are privileged compared to their foreign counterparts.

1) Threat of decline

In recent years, there have been growing concerns over the decline of the dollar. Some observers question whether there is a possibility or likelihood that currencies of other states could take the US’s place as global reserve currency and garner the associated benefits, including political power, that the US has enjoyed for the past seventy years. Nicholas Ross Smith argues that cryptocurrencies could prove to be ‘a weak spot’ of the US’s privileged position in the international order (2019: 91). Because technologies like Bitcoin are decentralized and anonymous, they are attributed with ‘counter-hegemonic potential’ (89). This is particularly so because they are difficult for states to control. “The growth of independent cryptocurrencies,’ he suggests, ‘perhaps offers a challenge to American primacy because of their decentralized design and their strong focus on privacy” (91).

2) Cryptocurrencies as weapon

Because they will likely bring changes to the way the global economic system functions, this could destabilize the power of the dollar. Ross Smith suggests that political and economic rivals, namely China and Russia, could seek to manipulate cryptocurrencies with the aim of undermining US control over the global financial system. These states, as ‘revisionist powers’ trying to change the international order, could attempt to weaponize state-backed digital or virtual currencies to weaken the dominant position of the dollar.

Ross Smith concludes that these fears remain hypothetical because there are limitations to the extent Russia or China could control and direct cryptocurrencies, given their decentralized and private mode of operation. It is therefore too early to herald the decline of the US dollar as the global reserve currency and consequently the liberal economic order is likely to stay intact for the foreseeable future. However, given the importance of the US’s financial dominance, one of the main threats to its power may arise through the growth of cryptocurrencies which lay the ground for a weakening of the dollar.


Birch, David (2020) The Digital Currency Revolution. Centre for the Study of Financial Innovation. Report No. 154.

Available online:

Buchanan, J (2013) ‘Bitcoin vs. Dollar Hegemony’. E-International Relations Studies, accessed 27/06/2022: http://www.e-ir.info/2013/09/16/ bitcoin-vs-dollar-hegemony/.

Golumbia, David (2016) The Politics of Bitcoin: Software as Right-Wing Extremism. Minneapolis: University of Minnesota Press.

Isin, Engin (2017) Enacting International Citizenship. In Basaran, Tugba, Didier Bigo, Emmanuel-Pierre Guittet and R. B. J. Walker (Eds.) International Political Sociology: Transversal Lines. London, Routledge, pp 185-204.

Ross Smith, Nicholas (2019) International Order in the Coming Cryptocurrency Age: The Potential to Disrupt American Primacy and Privilege? Rising Powers Quarterly 4(1): 77-97.