scholarly journals Bretton Woods 2 system and US balance of payment deficit

2008 ◽  
Vol 60 (1) ◽  
pp. 116-136
Author(s):  
Zaklina Stepanovic-Petrac
Keyword(s):  
International Monetary System ◽  
Financial Architecture ◽  
Bretton Woods ◽  
Monetary System ◽  
International Financial Architecture ◽  
National Currencies ◽  
The Us ◽  
The Usa ◽  
Us Dollar ◽  
Foreign Exchanges

The author explores the evolution, functioning, similarities and differences between the original Bretton Woods international monetary system that operated from 1945 to 1973 and the present modified institution, which is symbolically called Bretton Woods 2 System. The existing international financial architecture keeps on being based on the hegemony of the US dollar, as a dominant reserve currency. However, in spite of the fact that in most cases the present international monetary system implies the regime of flexible foreign exchanges rates, a characteristic of this system is that many countries in different degrees refuse to accept the appreciation of their national currencies to the US dollar. At the same time, the domination of the USA, the most indebted country in the world, is becoming a very serious threat to its sustainability. However, as the author concludes, the creators of the international monetary system, being aware how serious could be the consequences of its cessation, endeavor to extend its operation accepting less expensive consequences of keeping it alive.

scholarly journals The US dollar and new imperialism under the logic of capital accumulation

2019 ◽  
Vol 2 (1) ◽  
pp. 98-107
Author(s):  
Haiping Qiu ◽  
Min Zhao
Keyword(s):  
Capital Accumulation ◽  
International Monetary System ◽  
Content Type ◽  
Monetary System ◽  
The Us ◽  
The World ◽  
The Status ◽  
The Usa ◽  
New Imperialism ◽  
Us Dollar

Purpose The world currency is endowed with two inherent contradictions, namely, the general contradiction of all currencies and the special contradiction between the quality and quantity of the world currency. The paper aims to discuss these issues. Design/methodology/approach In the wake of the Second World War, the USA, with its strong economic and military strength, established an international monetary system centered on the US dollar (USD). This gave USD the status of “world currency” and bounded it to the US imperialist hegemony with mutual integration and interaction, making it possible for USD capital to conduct international exploitation and wealth plundering extensively around the world. Findings The contradiction between the capital logic and the power logic, which is inherent in capital accumulation models of the new imperialism, also indicates the inevitable decline of USD. Originality/value This constitutes an important feature of the new imperialism. However, as a sovereign currency, USD has inextricable and inherent contradictions while exercising its function as the world currency.

scholarly journals Changes in the international monetary system: opportunities and risks for the US dollar

2020 ◽  
Vol 183 (5-6) ◽  
pp. 4-16
Author(s):  
Alicja Sielska ◽  
Keyword(s):  
Research Question ◽  
International Monetary System ◽  
Balance Of Power ◽  
Monetary System ◽  
National Currencies ◽  
The Us ◽  
Leading Position ◽  
Us Dollar ◽  
Global Arena ◽  
European Economies

In the 1940s, the US dollar was established as an international currency. Since then, its position has been practically unchallenged. However, in light of the financial crisis of 2008, the strengthening of the Chinese and European economies, and the COVID-19 pandemic, it is necessary to reflect on the future balance of power in the international monetary system. To this end, this article poses the following research question: is the US dollar facing a threat to its leading position in the global arena? First, I describe the historical currency system and the position of the dollar after the 2008 crisis; next I analyze the pandemic up through the end of June 2020. Then, I consider three possible scenarios for the dollar. First, it is possible to create a new global currency which would consist of a basket of the five most important world currencies. The second option is to replace the dollar with another currency, especially the euro or the renminbi. The third and most probable scenario is the compresence of several competing national currencies in international trade. Abandoning the dollar is possible, but it would require significant financial and institutional changes. This means that in the absence of any easy solutions for dethroning the US currency, it will remain the world’s leading currency.

scholarly journals The evolution of the Offshore US-Dollar System: past, present and four possible futures

2020 ◽  
Vol 16 (6) ◽  
pp. 767-783 ◽  
Author(s):  
Steffen Murau ◽  
Joe Rini ◽  
Armin Haas
Keyword(s):  
Hierarchical Structure ◽  
International Monetary System ◽  
Central Banks ◽  
Bretton Woods ◽  
Monetary System ◽  
The Us ◽  
Money Creation ◽  
Us Dollar ◽  
To Come

AbstractLittle has contributed more to the emergence of today's world of financial globalization than the setup of the international monetary system. In its current shape, it has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore – a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007–9 Financial Crisis, this ‘Offshore US-Dollar System’ has been backstopped by the Federal Reserve's network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy.

scholarly journals Stablecoins, Central Bank Digital Currencies and US Dollar Hegemony

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Luca Fantacci ◽  
Lucio Gobbi
Keyword(s):  
First Generation ◽  
International Monetary System ◽  
Global Scale ◽  
Electronic Payment ◽  
Payment Systems ◽  
Monetary System ◽  
Payment Instruments ◽  
The Us ◽  
Us Dollar ◽  
Main Flaw

Abstract Stablecoins are second generation cryptocurrencies, aimed at maintaining their value stable with respect to official currencies. The most famous example is perhaps represented by libra, the cryptocurrency announced by Facebook in 2019 and yet to be issued; the most widespread is tether, with a market capitalization of almost 10 billion dollars and a daily transaction volume of almost 50 billion dollars, which makes it the most used cryptocurrency. The diffusion of stablecoins is hardly surprising. By minimizing volatility – the main flaw of first generation cryptocurrencies, including bitcoin –, stablecoins are expected to play an even more important role on a global scale within a few years. Our contribution deals not with the economic, but specifically with the geopolitical factors that could foster the use of stablecoins for strategic and military purposes. In particular, we focus on how such payment instruments, together with other alternative electronic payment systems, could be used as a means to circumvent economic sanctions and ultimately as a challenge to the hegemony of the US dollar in the international monetary system.

The Principles and Operation of the Bretton Woods International Monetary System in the Years 1944–1971. The Reasons for Its Collapse

2016 ◽  
Vol 8 (2) ◽  
pp. 0-0
Author(s):  
Zbigniew Klimiuk
Keyword(s):  
International Trade ◽  
World Economy ◽  
International Monetary System ◽  
The United States ◽  
International Liquidity ◽  
Bretton Woods ◽  
Monetary System ◽  
The Us ◽  
The World ◽  
The Stability

The subject of the article is an analysis of the role of the US dollar in the development of international trade and the world economy during the period of the Bretton Woods monetary system (1944–1971). The international monetary system existing at that time was, in principle, a gold exchange standard based mainly on the national currency of the United States. However, a relatively small role was also played by other currencies including, in particular, the pound sterling. It should be noted that the Bretton Woods rules did not match the conditions in the world economy which emerged after World War II. The main areas of criticism concerned such assumptions as the maintenance of an official fixed price for gold, or a too narrowly interpreter postulate for the stability of the exchange rate. On the other hand, it should be noted that the introduction of the stability of exchange rates and the abolition of restrictions on payments were fundamentally sound decisions. They led in fact to the minimisation of a risk inherent in international trade and its rapid growth. One should also emphasise the fact that from the very beginning, in the international gold based monetary system there was an internal contradiction (paradox), which eventually led to its collapse. This was namely the fact that the growth in world trade created a growing demand for international liquidity. This was tantamount to a necessity to maintain a permanent balance of payments deficit in respect of the country whose currency was considered the key currency. At the same time, the growing volume of the US currency resulted in an increasing crisis of confidence in the dollar.

Shaping the Future of the IMS: Regionalization of Selected Asian Currencies

2015 ◽  
Vol 01 (03) ◽  
pp. 347-372
Author(s):  
Il Houng Lee
Keyword(s):  
International Monetary System ◽  
Policy Coordination ◽  
Monetary System ◽  
Tier System ◽  
The Us ◽  
Asian Economies ◽  
Market Framework ◽  
Us Dollar ◽  
Second Tier ◽  
Recent Financial Crisis

The dominance of the US Dollar (USD) as the main global reserve currency will continue for the foreseeable future. Yet various events, including the most recent financial crisis, have pointed to the need for an alternative system that will strengthen market discipline rather than a system relying excessively on policy coordination. The rise of Asian economies led by China provides a unique opportunity for a regionalization of selected Asian currencies, namely, the settling of current account transactions among Asian economies using selected local currencies. To do so, relevant governments should be more proactive in setting up a market framework by following similar steps taken by China for RMB internationalization. This will provide an opportunity for the market to determine how fast it wants to shape an alternative international monetary system. Most likely, a tri-polar and two-tier system will emerge. As the medium of exchange and unit of account, the first tier, the USD, the Euro, and the RMB will dominate, forming a tri-polar system along each of which various local currencies will be used specific to the locality. As the store of value, the second tier, the USD will retain its hegemony for a few more decades. Gradually, these two tiers will merge.

scholarly journals THE IMPACT OF THE RENMINBI INTERNATIONALIZATION ON THE GLOBAL MONETARY ORDER

2019 ◽  
Vol 1 (2) ◽  
pp. 13-30
Author(s):  
Katarzyna Twarowska
Keyword(s):  
Foreign Exchange ◽  
International Monetary System ◽  
International Currency ◽  
Monetary System ◽  
International Money ◽  
The Us ◽  
Us Dollar ◽  
The Stability ◽  
The Impact ◽  
Research Analysis

Background and the purpose: The Chinese economy is the fastest growing and changing economy in the modern world. The importance of the renminbi as an international currency is not relevant to China's economic potential and role in the global economy, however, many scientific studies indicate that the position of that currency in the functions of international money will become stronger in the future. This encouraged the author to assess the consequences of the renminbi internationalisation, in particular the impact on the stability of the international monetary system. An additional aim of the paper is to present the possible scenarios for reform of the international monetary system and assess whether the Chinese currency has a chance to become a global currency. Methods: The assessment of the renminbi’s role in global foreign exchange relations was carried out by analysing the use of Chinese currency in the main functions of international money in official sector (reserve currency, intervention currency, anchor currency) and private sector (investment currency, vehicle currency in international trade and on the foreign exchange market, invoicing and quotation currency) using the Cohen matrix. The author also assessed the benefits for the stability of the international monetary system, resulting from the transition from a system based on the dominance of the US dollar to a multi-currency system, including the renminbi. The study included theoretical research (analysis of the literature and research reports) and empirical research (analysis of statistical data). Results and conclusions: The author confirmed the research hypothesis: An increase in the use of renminbi in the functions of international currency will increase the stability of the international monetary system by reducing the dependence of this system on the single currency, which is the US dollar.

Hollowing out Keynesian norms: how the search for a technical fix undermined the Bretton Woods regime

2004 ◽  
Vol 30 (3) ◽  
pp. 383-404 ◽  
Author(s):  
Jacqueline Best
Keyword(s):  
International Monetary System ◽  
Data Gathering ◽  
Reliable Data ◽  
Public Intervention ◽  
Financial Architecture ◽  
Bretton Woods ◽  
Monetary System ◽  
Monetary Order ◽  
First Time ◽  
The International Monetary Fund

After a decade of financial crises, international economic leaders have begun to talk about the need for reform. Yet, while they speak in dramatic terms of a ‘new financial architecture’, in practice, they seem more interested in more limited renovations to the international monetary system. Arguing that ‘A lack of reliable data . . . was critical to [recent] crises’, the International Monetary Fund has, for example, emphasised the importance of better data-gathering systems and greater surveillance. By defining the cause of the crises as informational rather than systemic, Fund leaders thus justify a limited solution: in Michel Camdessus' words, what is needed is ‘no new machinery, no new heavy public intervention’, but rather a series of limited technical fixes. This is not the first time that international financial leaders have succumbed to the seduction of technique. Four decades ago, as the Bretton Woods system struggled through an escalating series of monetary crises, state and global policymakers chose a similar path of technical expediency, opting for limited reforms. As we now know, those strategies ultimately proved to be inadequate to the task of rescuing the postwar monetary order. In this article, I revisit that regime and its collapse, examining the roots of the contemporary search for technical fixes.

The Long-Predicted Failure of the Post-Bretton Woods “Non-System”

2022 ◽  
pp. 1-8
Keyword(s):  
Saudi Arabia ◽  
Exchange Rates ◽  
Bretton Woods ◽  
Monetary System ◽  
The Us ◽  
The World ◽  
Us Government ◽  
Oil Shock ◽  
World Economic ◽  
Us Dollar

The monetary system implemented at Bretton Woods in 1944 made the US dollar the centre of the world economic system, with 43 other countries' currencies linked to it via fixed exchange rates. However, once the US government broke its promise to redeem dollars in gold at $35 per ounce on August 15, 1971, expansion of the supply of dollars was no longer constrained, and like many currencies before it, the lack of monetary discipline led to inflation through which the value of the dollar has fallen by about 98%. The “oil shock” of the 1970s led to the introduction of the “petro-dollar” system whereby Saudi Arabia, then the largest oil producer, agreed to accept only US dollars in payment for its oil in exchange for the US government's pledge to defend it. This shored up demand for the fiat US dollar, enabling it to survive until its now approaching endgame.

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