Sterling Area

The sterling area was a World War II wartime emergency measure that involved cooperation in exchange control matters between a group of countries, which at the time were mostly dominions and colonies of the British Empire (later the Commonwealth). These countries either used sterling as their currency, or else their own currency was pegged to the British pound; even member countries with their own currency held large sterling balances in London for the purposes of conducting overseas trade. The purpose of the sterling area was to protect the external value of the pound sterling. All of the British Empire except for Canada, Newfoundland and Hong Kong joined the sterling area in 1939.

The significance of the sterling area was seriously diminished in June 1972 when the British government (in consultation with the Irish, Manx, and Channel Islands governments) unilaterally applied exchange controls to the other sterling area countries with the exception of Ireland, the Isle of Man and the Channel Islands.

The sterling area did not cease to exist on a specific date, but disappeared in phases between June 1972 and 1979. Ireland unilaterally imposed exchange controls on the UK in 1978 and, in 1979, the British government completely lifted all the 1939 exchange controls.