Money: Shrinking Sterling's Role

Once again, the central bankers of Western nations rallied last week to support the pound sterling. They agreed to give Britain $2 billion of stand-by credit. This time, however, Britain's creditors insisted on tough new terms to correct the anomaly of a country that seeks to retain prestige as an international banker while remaining perennially broke. The outcome was a plan to reduce—and perhaps gradually end —the pound's function as one of the world's two reserve currencies.

That role, which the pound shares with the U.S. dollar, has long strained Britain's resources. Accordingly, the plan lifts some of the burden...

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