The International Monetary system

Introduction

According to the title of one of the most well-known books on the UN’s founding, the 1944 Bretton Woods Conference, which produced the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank), and the San Francisco Conference, which produced the UN the following year, were significant turning points in the history of international cooperation. In view of the 1930s setbacks for international political and economic cooperation, these triumphs were especially noteworthy. Disappointments arose, of course; chief among them was the inability to initiate a second leg of the economic cooperation system that the US Congress had agreed to in Havana in 1948; only the General Agreement on Tariffs and Trade, which had been approved the previous year, had been implemented as a result of the agreement’s failure to be ratified. After nearly fifty years, the World Trade Organization was established. In any event, the Second World War’s end and the initial years following it are unparalleled in the annals of international cooperation.

In terms of the economy, collaboration was particularly successful as seen by the speedy reconstruction of Western Europe and Japan, which ushered in the fastest-growing period of economic growth in world history and, more specifically, the fastest-growing period of international trade. Disappointing things also happened, most notably the innate design flaws that, in the case of the international monetary system (the topic of this book), ultimately resulted in the Bretton Woods arrangements collapsing in the early 1970s, no alternative system being agreed upon, and the de facto emergence of the “non-system” that has persisted to this day. We may also include the inability to align the Communist nations with the Bretton Woods institutions, as demonstrated by China’s 1980 IMF membership takeover of Taiwan and the Soviet Union’s post-Collapse collapse of the Berlin Wall.

The international monetary system is the main topic of this chapter, which serves as an overview of the topics covered in-depth throughout the remainder of the book. Of course, a lot of attention has been paid to the histories of the international monetary system in general and the IMF in particular. This includes more contemporary evaluations of the role of developing nations in those negotiations (Helleiner 2014), as well as new and old histories of US-UK negotiations in the late war years and the deal finally struck at Bretton Woods (Conway 2015; Gardner 1969; Steil 2013). The views of those who shaped the history of the international monetary system (Solomon 1982), official and semi-official histories of the IMF (de Vries 1976, 1985, 1987; Horsefield 1969; James 1996), and academic histories of the system (Eichengreen 2008; Helleiner 1994; Yago, Asai, and Itoh 2015) are also included. Therefore, the chapter does not attempt to reconstruct the history of the system in detail; rather, it serves as a historical backdrop to the contemporary issues that are examined throughout the remainder of this volume, including the origins of the issues the system faced at various points in time, their similarities and differences, and the role of emerging and developing nations within the system.

This introduction is the first of six sections that make up this chapter. The second examines the history of the discussions and the Bretton Woods system’s architecture. The third examines the conflicts that the Bretton Woods monetary system encountered during the 1960s and the early 1970s, when it collapsed. The fourth examines how the collapse was handled, why a new system could not be agreed upon, and what non-system or ad hoc arrangements resulted. The next quarter of a century or more, during which these arrangements developed, is covered in the fifth. In the last section, we examine current concerns that could be interpreted as building a more comprehensive global “financial safety net,” to borrow a phrase that has gained popularity. Although the North Atlantic financial crisis1 before it, this process didn’t completely emerge until after it did.

Be the first to comment

Leave a Reply

Your email address will not be published.


*