Currency warfare

Currency warfare is intentional, attributable economic action aimed at structurally degrading an adversary's currency stability or monetary capacity. This narrow meaning applies the Encyclopedia's Tennant structural-degradation threshold within economic statecraft. Competitive exchange-rate management, coordinated monetary adjustment and international currency rivalry remain currency statecraft or monetary conflict unless evidence establishes a destructive state objective.

Strategic boundary

Public debate uses "currency war" much more broadly. It may describe competitive depreciation, monetary easing, intervention, capital controls or rivalry between international currencies. Benjamin J. Cohen's work on currency statecraft explains how governments use monetary capabilities and international currency roles for geopolitical purposes. That wider field includes influence, autonomy, market access and order-building. It does not make every contested monetary policy an act of warfare.

Under the Encyclopedia's house definition, currency warfare requires a direct state nexus, offensive purpose and intended structural effect. The target is another political community's monetary capacity: its exchange-rate regime, reserves, settlement access, confidence or ability to conduct monetary policy. Market loss alone does not prove the category. Analysts must establish who directed the action, what mechanism was used, what outcome was sought and whether ordinary trading or domestic stabilisation offers a better explanation.

Adjacent forms

Competitive depreciation concerns management of one's own currency to affect trade or domestic adjustment. The 1930s experience is often reduced to a linear story in which devaluation exported unemployment and provoked collapse. Barry Eichengreen and Jeffrey Sachs show a more complicated relationship, including evidence that depreciation aided recovery. The period supports analysis of monetary conflict and policy spillovers, not an automatic warfare classification.

The 1985 Plaza Accord was coordinated currency statecraft. The Group of Five statement recorded agreement that exchange rates should better reflect economic conditions and that further orderly appreciation of non-dollar currencies was desirable. The International Monetary Fund's 1987 annual report provides an institutional account of subsequent exchange-rate coordination. The agreement can be analysed alongside trade pressure and alliance bargaining, but coordinated adjustment is not currency warfare merely because it changed relative prices.

Brazilian finance minister Guido Mantega's 2010 reference to an international currency war illustrates the term's rhetorical scope. Mario Draghi's 2011 speech records contemporary concern about monetary tension and competitive policy. Such language identifies a political dispute. It does not settle intent or classification.

Offensive action and attribution

The narrower category can include a state-directed operation intended to break a currency peg, exhaust reserves, disrupt monetary transmission or destroy confidence as part of a structural campaign. Financial restrictions can also impair monetary capacity, but reserve immobilisation or payment exclusion must be assessed according to purpose. A coercive measure tied to a credible demand remains different from an operation designed to produce lasting monetary damage.

The Banque Havilland proceedings demonstrate the attribution discipline required. In Rangecourt SA (formerly Banque Havilland SA) and others v Financial Conduct Authority [2026] UKUT 47 (TCC), the Upper Tribunal found that bank employees produced an improper market-manipulation strategy and that a bank director intended to present it to Mubadala. The Tribunal was not satisfied that the document had been shared with Mubadala and made no adverse finding against Mubadala or anyone connected with it. The public record reviewed through 29 July 2026 contained the Upper Tribunal decision and no later appellate disposition. That position must be rechecked before release. The decision does not establish that Mubadala, the United Arab Emirates or another sovereign authority adopted, ordered or executed the plan.

Evidence and limits

Currency markets make hostile action difficult to distinguish from ordinary speculation. Similar price movements can result from macroeconomic news, portfolio adjustment, monetary policy or commercial hedging. Claims of warfare therefore require evidence beyond correlation, preferably including instructions, communications, adjudicated findings or a documented public campaign.

Effects can also be self-undermining. Aggressive use of monetary leverage may encourage diversification or alternative settlement arrangements. Policy effort does not establish successful reduction in dependence. Reserve-share and settlement claims must be dated, and causal claims connecting a particular action to diversification require case evidence.

See also

Economic statecraft · Currency destabilisation · Currency manipulation (coercive) · Dollar reserve, clearing and asset infrastructure · De-dollarisation as backlash dynamic · Banque Havilland plan to manipulate the Qatari riyal, 2017-2026 · Financial warfare · Economic warfare

Sources

• Benjamin J. Cohen, Currency Statecraft: Monetary Rivalry and Geopolitical Ambition (University of Chicago Press, 2018).
• Barry Eichengreen and Jeffrey Sachs, "Exchange Rates and Economic Recovery in the 1930s," Journal of Economic History 45, no. 4 (1985): 925-946.
• Group of Five, "Statement of the G5 Finance Ministers and Central Bank Governors," 22 September 1985.
• International Monetary Fund, Annual Report 1987 (International Monetary Fund, 1987).
• Mario Draghi, "Tension and New Alliances: The Currency Wars," Bank of Italy speech, 18 August 2011.
• Rangecourt SA (formerly Banque Havilland SA) and others v Financial Conduct Authority [2026] UKUT 47 (TCC), 3 February 2026.
• UK Financial Conduct Authority, "Upper Tribunal Finds That Banque Havilland Devised a Plan to Harm the Qatari Economy," 3 February 2026.
• James J. Tennant, "Defining and Operationalizing Economic and Financial Warfare" (Article 1, doctoral corpus, unpublished manuscript).