From Hegemony to Transformation: The Institutional Logic of the Pound Sterling's Millennial Evolution

The pound sterling is one of the world's oldest currencies. Its evolutionary process from a global hegemonic currency to an important international currency provides a unique historical perspective for understanding the dynamic changes of the international monetary system. This paper adopts the analytical framework of historical institutionalism, reviews the nearly millennial evolution of the pound sterling through a literature review, and focuses on analyzing the institutional logic of its achievement of hegemony in the 19th century relying on the gold standard system, its hegemonic decline under the impact of the two World Wars in the 20th century, and its final post-war transformation into a modern international currency. This study shows that the essence of monetary hegemony is an extension of a nation's comprehensive strength, but its maintenance depends on a stable credit anchor and the ability to adapt to changes in the global economic landscape. The history of the pound sterling indicates that even a declining hegemonic currency can find its position in the new international order by virtue of its institutional resilience and historical accumulation. This process has practical implications for understanding the current trend of diversification in the international monetary system.