The Bretton Woods Institutions Sixty Years Later: A ‘Glocal’ Reform Proposal

The current international monetary architecture was set up in Bretton Woods in 1944 as a result of debate between Harry Dexter White (heading the US delegation) and John Maynard Keynes (for the UK). Both White and Keynes presented a series of plans and proposals for the creation of an international monetary and financial system with the aim of avoiding the troubles they were observing as a result of the Second World War. Because of the different economic situation in the USA with respect to that in the UK at the end of the Second World War, it should come as no surprise that White’s and Keynes’ plans were quite different from each other. The US economy was indeed in a strong position, as its production system had not been destroyed by the war and its current account recorded huge surpluses as a result of the need to rebuild the economies of those European countries devastated by the war. Further, the USA had an enormous stock of gold in its reserves, and could thereby guarantee convertibility of US currency into the precious metal. The UK, by contrast, experienced current account deficits as a result of the need to import a number of commodities from the USA without the possibility of paying for them by means of an equivalent flow of commercial exports. Views on the international payment system were therefore very different when seen from Europe or the USA.