The evolving international monetary system
Jane D'Arista2009, Cambridge Journal of Economics
Sign up for access to the world's latest research
checkGet notified about relevant papers
checkSave papers to use in your research
checkJoin the discussion with peers
checkTrack your impact
Abstract
The global financial and economic crisis has prompted renewed interest in international monetary reform. The key-currency status of the US dollar has been challenged but discussion of what might be reasonable objectives and institutional structures for a new system has not yet broken new ground. Nevertheless, as interest in the issue begins to include policymakers and non-governmental organisations, new proposals are likely to emerge. To assist the process, this paper provides an overview of how the international monetary system has evolved since the inauguration of the gold standard in the late 1800s to provide a context for some of the reform ideas that emerged during and after the discussions at Bretton Woods and some of the proposals that were offered subsequently. It concludes with an outline of three proposals by the author that are intended to expand the debate.
Related papers
A Brief History of the International Monetary System
2006
This paper provides a brief overview of the introduction and development of the international monetary system (IMS) from its inception in the 5th century BC to the present era. Particular reference is made from the establishment of the gold standard in the early 19th century under British hegemony to the Bretton Woods system under American hegemony and its evolution into the current system of fiat money, floating exchange rates and global financial flows. It explains the role and significance of the IMS for monetary stability and prosperity, and discusses the current challenges and its future outlook.
The Past and Future of the International Monetary System
Ассоциация «Некоммерческое партнерство по содействию в проведении научных исследований «Институт нового индустриального развития им. С. Ю. Витте», 2019
Despite signs over the decades that the world role of the dollar has been problematic, and much recent commentary pointing to signs that de-dollarization is happening, questioning of the role of the dollar in the international monetary system has been remarkably untheoretical and unhistorical fashion. Since no heap of facts, no matter how large, can amount to an argument, this is a serious intellectual liability. Moreover, the world has been paying, at least the 1980s, a heavy price for this lack of understanding. The purpose of this paper is to clear up this misunderstanding by pointing to the largely ignored intimate and necessary relationship between financialization-of the Western economies and the pressures they generate for the rest of the world to follow suit, exposing them to dangerous financial and currency volatility-and the dollar-centred international monetary system. This relationship can only be understood by putting the dollar's world role in the longer historical perspective of the modern international monetary system, going back to the role of the pound sterling under to so-called international gold standard.
The Gold Standard and the Origins of the Modern International Monetary System
This article explores the ways in which the classical gold standard established the foundations for a modern international monetary system with its distinctive forms of crisis and regulatory frameworks. The specific nature of this transformation is often overlooked because of a tendency in the literature to compare the gold standard in relation to subsequent monetary systems, such as BrettonWoods. To remedy this historical bias, the classical gold standard is compared with previous monetary systems and it is concluded that it contributed to expand the array of monetary instruments for conducting monetary policy. By progressively subjecting the management of fiduciary money to state control the institutions of the gold standard created a new monetary framework that opened the way for central banking. However, the commitments taken to this effect, such as provisions on the convertibility of banknotes, created new opportunities for speculation. I argue that this new weakness would become the main preoccupation of monetary policy in the 20th century and lay down the foundations for international cooperation and its novel emphasis on monetary stability.
The post-Bretton Woods International Monetary Landscape: the Rise of the Dollar Standard, its causes, challenges and alternatives
This year marks the 70 th anniversary of the epoch-making Bretton Woods institution. The breakdown of its crafted quasi-gold standard took place in crucial events which include America's unilateral suspension of the dollar's gold convertibility and a transition from a state-led to a market-oriented economy. Against the backdrop of continued global monetary disorder, for the first time in history, a national fiat currency replaced gold which once was the world's major reserve asset. This effectively renders the dollar as the de facto reserve currency. However, the principal flaw inherent in the dollarcentred world manifests itself in an increasing incidence of credit-induced crises which imperils global economic stability. This essay will discuss why the dollar has gained dominance and how it has affected and shaped the global economy. Its challenges will also be examined. Lastly, the trajectory of reforming the international monetary architecture will be evaluated.
The Past and Future of the International Monetary System (2019)
ЭКОНОМИЧЕСКОЕ ВОЗРОЖДЕНИЕ РОССИИ (Economic Revival of Russia) периодическое научное Издание (Scientific Periodical), EKONOMICHESKOYe VOZROZHDENIYe ROSSII periodicheskoye nauchnoye Izdaniye,, 2019
Despite signs over the decades that the world role of the dollar has been problematic, and much recent commentary pointing to signs that de-dollarization is happening, questioning of the role of the dollar in the international monetary system has been remarkably untheoretical and unhistorical fashion. Since no heap of facts, no matter how large, can amount to an argument, this is a serious intellectual liability. Moreover, the world has been paying, at least the 1980s, a heavy price for this lack of understanding. The purpose of this paper is to clear up this misunderstanding by pointing to the largely ignored intimate and necessary relationship between financialization-of the Western economies and the pressures they generate for the rest of the world to follow suit, exposing them to dangerous financial and currency volatility-and the dollar-centred international monetary system. This relationship can only be understood by putting the dollar's world role in the longer historical perspective of the modern international monetary system, going back to the role of the pound sterling under to so-called international gold standard.
A brief history of the international monetary system since Bretton Woods
This study has been prepared within the UNU-WIDER project on 'Macro-Economic Management (M-EM)'.
Reform of the international monetary system : a jagged history and uncertain prospects
This paper analyzes the historical evolution of the international monetary system in the context of the rising role of developing countries in the world economy and the emerging multi-polar growth setting. It evaluates the stability of the current"non-system"and how the global economic context is likely to affect that stability in the coming years with potential adverse effects on both advanced and developing economies. Given the likely trend toward a multi-polar reserve currency system, the paper evaluates the stability of the emerging system, as well as the current proposals for reform of the international monetary system. The paper concludes that more ambitious reforms of the system may be needed to meaningfully reduce future global economic and financial instability.
2705) Reforming the World Monetary System: book review (2014)
Mundorama (n. 91, ISSN: 2175-2052), 2014
Hartford, 27 outubro 2014, 7 p. Book Review of Carol M. Connell: Reforming the World Monetary System: Fritz Machlup and the Bellagio Group (London: Pickering & Chatto, 2013. xii + 272 pp.; ISBN 978-1-84893-360-6; Financial History series n. 21, $99.00; hardcover). Publicado em Mundorama (n. 91, 22/03/2015; ISSN: 2175-2052). Relação de Publicados n. 1164
Reforming the international monetary system
2011
This report presents a set of concrete proposals of increasing ambition for the reform of the international monetary system. The proposals aim at improving the international provision of liquidity in order to limit the effects of individual and systemic crises and decrease their frequency.
Evolution and Contemporary Trends of the International Monetary System
ЗБОРНИК РАДОВА ЕКОНОМСКОГ ФАКУЛТЕТА У ИСТОЧНОМ САРАЈЕВУ, 2018
The growth dynamics of international exchange and capital flows is conditioned by the efficiency of the international monetary system whose basic task is to provide for international liquidity and smooth international payments. The tendencies in international economic relations in the time of globalisation have determined further directions for the development of the international monetary system. The breakup of the Bretton-Woods System initiated the establishment of a new European monetary system with the aim to stabilise the exchange rates and improve further process of integration and international economic relations. In this research paper we have pointed out to the fact that economic interdependence of souvereign countries leads to coordination of macroeconomic policies, and that it can motivate monetary integration within the monetary policy. The objective of this research paper is to emphasize the stability of the international monetary system as a prerequisite for sust...
History International Monetary
The international monetary system is the structure within which foreign exchange rates are determined, international trade and capital flows are accommodated, and balance-of-payments adjustments made. This article will discuss the evolution of the international monetary regimes starting from the pre 1875, metalism standard to date when the flexible exchange rate regime now operating since 1973. The other regimes are the classical gold standard, inter war period, the fixed dollar exchange rate regime under the Bretton Woods system after the WWII. When discussing the monetary regimes highlights of the strengths and weaknesses of each regime will be brought out, and thereafter form a conclusion about the most beneficial and stable regime.
Towards a Global Currency? Condition and Scenarios for Evolution of the International Monetary Order
Ekonomika, 2014
The main goal of the paper is to examine the key features of the current international monetary system and provide an overview of scenarios for the future global monetary arrangements. It is noted that just a few years back there seemed to be a bipolar monetary system based on the U.S. dollar and the euro in the making. The rise of China and the possible emergence of the Chinese renminbi as an international currency gave way to a debate on a tripolar monetary system. Today, the future of the international monetary system is still open. It needs reforming in order to meet the requirements of the new global order with multiple growth centers, the growing role of transnational actors, and the increasing global influence of the major emerging economies. The analysis reveals that the relations among the major international currencies are changing, and today at least three scenarios for the future monetary order seem possible. These are the maintenance of the U.S. dollar domination, a shift towards a multipolar currency order, and the gradual regionalization of the currency order. The concept of a single currency -though theoretically attracting -seems impossible to be implemented in the foreseeable future. The analysis is based on monetary and economic theories, historical patterns of the development of monetary regimes, and an extensive literature overview backed by the data provided by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS).
A proposal for monetary reform
Free Banking and Monetary Reform, 1989
Development of the International Monetary System Conditions of Globalization
EUROPEAN RESEARCH STUDIES JOURNAL
This paper outlines the modern trends in the development of the international monetary system in conditions of financial globalization. The paper establishes that the international monetary system has evolved through different stages necessitated by various economic crises at different periodic intervals. It is noted in the paper that despite the inefficiencies in the current dollar denominated international monetary system developed countries are reluctant to do any reforms. However, International monetary system reform is obvious and most likely will happen under the growing crisis in the international financial systems and credit relations. It is proposed that countries look at new innovations that will make international transactions cheaper and less risky.
The Future International Monetary System: Dominant Currencies or Supranational Money? An Introduction
Open Economies Review, 2012
Currencies—Time for a Bretton Woods II
Money - The New Rules of the Game, 2017
This chapter proposes a cooperative international monetary system. A first proposal for such a system was submitted by John Maynard Keynes at the Bretton Woods conference in 1944. Keynes foresaw a complementary currency for international economic exchange, called Bancor, operated by an International Clearing Union. Furthermore, sanctions both for trade surplus and deficit countries would have dis-incentivized and remedied trade imbalances. His proposal was rejected by the US. Instead, the dollar hegemony was established. Consequently the Bretton Woods system collapsed in the 1970s due to its inherent construction failure. Macroeconomic instability, but also the debt crisis in low-income countries characterized the following decades. As a result of the financial crisis in 2008, the Keynes proposal has been rediscovered. UNCTAD senior economist Heiner Flassbeck presented an alternative model based on real effective exchange rates (REER) which deems the adjustment of exchange rates to real purchasing power in both countries as sufficient. A synthesis of both approaches, Keynes and Flassbeck, is proposed. Lord Keynes was right … and the world will bitterly regret that it did not accept his proposals. Geoffrey Crowther (Cited in Monbiot 2003, p. 178). The dollar reserve system will probably expire, if it is not doing so already. United Nations (2009, p. 115) 16.1 Failure of Bretton Woods I The current international monetary system is, "consistent" with the complete monetary and financial system, a source of massive speculation, systemic instability and inefficiency. The public good "monetary stability" does not currently exist. In contrast to other areas of the monetary system there was however an attempt at a political system, which was for a short time successful: the Bretton Woods system from 1944 to 1973. Towards the end of WWII 44 contracting member states signed the agreement at the Bretton Woods conference in the US 175
Related topics
Cited by
O capital acionário e sua necessidade: elementos para a compreensão do processo de financeirização da firma
Economia e Sociedade, 2017
Resumo O artigo examina o processo histórico de autonomização do capital acionário em relação ao circuito do capital empregado na produção e circulação de mercadorias. Com esse fim, ele apresenta sinteticamente a abordagem de Marx ao problema da relação entre ação individual e estrutura social na economia capitalista, e reconstitui suas reflexões acerca do capital portador de juros e do capital acionário. O artigo mostra que o capital acionário é uma forma social que emerge da contradição entre o caráter privado da riqueza capitalista e o impulso interno à socialização da atividade econômica desempenhada sob condições capitalistas. Com base nisso, ele explora a hipótese de que a autonomização relativa do capital acionário não deve ser compreendida como um resultado contingente de decisões mais ou menos arbitrárias, mas sim como um resultado necessário do desenvolvimento histórico do modo de produção capitalista.
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.