In 1971, President Richard Nixon closed the window on gold, effectively ushering in a new global monetary non-system with a single pillar: the US dollar. Fifty years later, this pillar is showing signs of fatigue. Can the world muster the necessary cooperation to handle all that comes next?
Elmira Bayrasli: welcome to Opinion has it. I am Elmira Bayrasli.
It was the summer of 1944. World War II was raging and the world economy was in tatters. A peaceful and prosperous future characterized by global cooperation probably seemed like wishful thinking. And yet, at a remote hotel in Bretton Woods, New Hampshire, delegates from around the world laid the groundwork for it.
Archival recording: In Bretton Woods, New Hampshire, delegates from 44 Allied and Associated countries arrived for the opening of the United Nations Monetary and Financial Conference.
EB: The Bretton Woods conference gave birth to the International Monetary Fund and the International Bank for Reconstruction and Development, which would later become the World Bank.
Archival Recording: These meetings are designed to promote trade in the post-war world and to lay the foundations for lasting peace.
EB: It also implemented a fixed exchange rate system. All national currencies were valued against the US dollar, which was convertible into gold at a fixed rate.
Archival recording: when you think of a global currency, what do you think of? Is it the US dollar as it accounts for almost 90% of forex, about 62% of foreign exchange reserves? It is called the petrodollar.
EB: But while the Bretton Woods institutions became pillars of the international order, the Bretton Woods exchange rate system only lasted until 1971.
Archival Recording, US President Richard Nixon: I have ordered Secretary Connally to temporarily suspend convertibility of the dollar into gold or other reserve assets.
We hope you enjoy Project union.
To continue reading, subscribe now.
Sign up for FREE to access two premium items per month.
Already have an account? Log in