<P> The Dutch guilder emerged as a de facto world currency in the 18th century due to unprecedented domination of trade by the Dutch East India Company . However, the development of the modern concept of a reserve currency took place in the mid nineteenth century, with the introduction of national central banks and treasuries and an increasingly integrated global economy . By the 1860s, most industrialised countries had followed the lead of the United Kingdom and put their currency on to the gold standard . At that point the UK was the primary exporter of manufactured goods and services and over 60% of world trade was invoiced in pound sterling . British banks were also expanding overseas, London was the world centre for insurance and commodity markets and British capital was the leading source of foreign investment around the world; sterling soon became the standard currency used for international commercial transactions . </P> <P> Attempts were made in the interwar period to restore the gold standard . The British Gold Standard Act reintroduced the gold bullion standard in 1925, followed by many other countries . This led to relative stability, followed by deflation, but because the onset of the Great Depression and other factors, global trade greatly declined and the gold standard fell . Speculative attacks on the pound forced Britain entirely off the gold standard in 1931 . </P> <P> After World War II, the international financial system was governed by a formal agreement, the Bretton Woods System . Under this system the United States dollar was placed deliberately as the anchor of the system, with the US government guaranteeing other central banks that they could sell their US dollar reserves at a fixed rate for gold . </P> <P> In the late 1960s and early 1970s, the system suffered setbacks ostensibly due to problems pointed out by the Triffin dilemma--the conflict of economic interests that arises between short - term domestic objectives and long - term international objectives when a national currency also serves as a world reserve currency . </P>

When did the us dollar become reserve currency