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Monetary hegemony is an economic and political concept in which a single state has decisive influence over the functions of the international monetary system. A monetary hegemon would need:
- accessibility to international credits,
- foreign exchange markets
- the management of balance of payments problems in which the hegemon operates under no balance of payments constraint.
- the direct (and absolute) power to enforce a unit of account in which economic calculations are made in the world economy.
The term monetary hegemony appeared in Michael Hudson's Super Imperialism, describing not only an asymmetrical relationship that the US dollar has to the global economy, but the structures of this hegemonic edifice that Hudson felt supported it, namely the International Monetary Fund and the World Bank. The US dollar continues to underpin the world economy and is the key currency for medium of international exchange, unit of account (e.g. pricing of oil), and unit of storage (e.g. treasury bills and bonds) and, despite arguments to the contrary, is not in a state of hegemonic decline (cf. Fields & Vernengo, 2011, 2012).
The international monetary system has borne witness to two monetary hegemons: Britain and the United States.