Sterling Area

Summary of Sterling Area

Following the Imperial Conference at London in 1931, at which the Commonwealth was established, most Commonwealth countries (excluding Canada) agreed informally to maintain a significant portion of their official reserves in sterling and to peg their currencies in relation to the pound. At different times, certain non-Common- wealth countries (including Sweden, Thailand, and Japan) participated in this arrangement. Exchange controls implemented by Britain during World War II formalized the agreement, resulting in scheduled territories (i.e., participating areas) that agreed to maintain reserves in London and to impose exchange controls compatible with those of Britain.

Following the war, with the creation of the Inter-national Monetary Fund, various governments left the scheduled territories scheme.

(Main Author: William J. Miller)