As a student with almost zero background in economics, I've been struggling to comprehend the notion of the currency convertibility. Most of the definitons I've found online talk about the ease with which a country's currency can be converted into another currency. But what exactly is meant by the ease? Does it mean both currencies should be equal, or close to being equal, in their value or is it something else?
To provide context, I'm attaching the part of an article from nationalarchives.gov.uk talking about the American financial aid to Britain during and after the WWII. Also, as I'm not able to figure out the meaning of the word, I don't understand the following (the last) sentence of the extract either.
The economic circumstances of the late 1940s tested relations between the unions and the Labour Party. Financial assistance through the American lend-lease system ended in the autumn of 1945. Although a further loan was negotiated in 1945, it was apparent that a great increase in production and exports would be necessary to prevent a balance of payments deficit. In the winter of 1947, a coal shortage produced an energy crisis, which threatened to undermine production.
In July 1947, the Chancellor, Hugh Dalton, returned the pound to convertibility against the dollar (as required by the terms of the American loan). However, as dollar reserves rapidly flowed out of the country, a full-blown economic crisis followed and in August of the same year Dalton was forced to suspend the move.
Thank you in advance for the response, I'd very much appreciate it.