The New Bretton Woods Agreement

Conversely, it should be recognised that a new agreement should have a limited lifespan. The types of pressure that led to the abrupt end of the Bretton Woods agreement in 1971 must be monitored. Similar charges are expected to result in a moderate and structured deconstruction of the agreement, although it is necessary to agree on criteria for determining its dissolution, which would be subject to regular review and the development of plans for orderly dissolution. The third lesson is that reform negotiations take time, but they must be completed before the crisis subsides. The American and British teams spent two years laying the groundwork for the Bretton Woods Conference in 1944. If they had not agreed before the end of the war in 1945, it is highly unlikely that the project would ever have been successful. They put a proposal to create a trade organization on a slower path, so that they could first focus on the creation of the IMF and the World Bank. Once the war was over, it was more difficult to reach an agreement and the World Trade Organization was not created until half a century later. Crises concentrate the mind and crush everyday concerns and rivalries. The challenge is enormous. Throughout the twentieth century, national leaders often attempted to organize international conferences to create new agreements and institutions to address the persistent problem of un coordinated and contradictory policy-making. Almost all of these efforts have ended in failure.

The peace conference that followed World War I founded the League of Nations with an economic department, but the organization did not have its teeth and the United States never joined. A major conference in London in 1933 was intended to revive the monetary role of gold, but it too failed in the absence of American leaders. The 20s Committee met for two years in the mid-1970s and failed to agree on a new exchange rate policy system. Calls for a new Bretton Woods since the 1980s have never gained momentum. The Bretton Woods Agreement was created in 1944 at a conference of all allied nations of World War II. It took place in Bretton Woods, New Hampshire. The G20 is currently overseeing the institutions that would lead a new agreement – the IMF and the World Bank. The responsibility for ensuring that these institutions are at the heart of the global architecture rests, at least initially, with the advanced economies, in particular the G20 members of the advanced economy. Comprehensive cooperation between governments will be needed to accelerate the recovery and ensure that excessive competition does not conflict. Could a new Bretton Woods agreement contribute to global economic and financial recovery, not only by recognizing its finished operation, but also by establishing criteria that will lead to an orderly dissolution once its work is completed? The agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations to oversee the new system. Almost inevitably, the three major problems of the interwar gold standard resurfaced: adaptation, confidence and liquidity.

Post-war global capitalism suffered from a huge shortage of dollars. The U.S. ran huge trade surpluses and the U.S. …