The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
We reinterpret the commonly held view in the U.S. that France, by following a policy from 1965 to 1968 of deliberately converting their dollar holdings into gold helped perpetuate the collapse of the Bretton Woods International Monetary System. We argue that French international monetary policy under Charles de Gaulle was consistent with strategies developed in the interwar period and the French Plan of 1943. France used proposals to return to an orthodox gold standard as well as conversions of its dollar reserves into gold as tactical threats to induce the United States to initiate the reform of the international monetary system towards a more symmetrical and cooperative gold-exchange standard regime.
During the twentieth century, foreign-exchange intervention was sometimes used in an attempt to solve the fundamental trilemma of international finance, which holds that countries cannot simultaneously pursue independent monetary policies, stabilize their exchange rates, and benefit from free cross-border financial flows. Drawing on a trove of previously confidential data, Strained Relations reveals the evolution of US policy regarding currency market intervention, and its interaction with monetary policy. The authors consider how foreign-exchange intervention was affected by changing economic and institutional circumstances—most notably the abandonment of the international gold standard—and how political and bureaucratic factors affected this aspect of public policy.
Why did monetary authorities hold large gold reserves under Bretton Woods (1944–1971) when only the US had to? We argue that gold holdings were driven by institutional memory and persistent habits of central bankers. Countries continued to back currency in circulation with gold reserves, following rules of the pre-WWII gold standard. The longer an institution spent in the gold standard (and the older the policymakers), the stronger the correlation between gold reserves and currency. Since dollars and gold were not perfect substitutes, the Bretton Woods system never worked as expected. Even after radical institutional change, history still shapes the decisions of policymakers.
At the close of the Second World War, when industrialized nations faced serious trade and financial imbalances, delegates from forty-four countries met in Bretton Woods, New Hampshire, in order to reconstruct the international monetary system. In this volume, three generations of scholars and policy makers, some of whom participated in the 1944 conference, consider how the Bretton Woods System contributed to unprecedented economic stability and rapid growth for 25 years and discuss the problems that plagued the system and led to its eventual collapse in 1971. The contributors explore adjustment, liquidity, and transmission under the System; the way it affected developing countries; and the role of the International Monetary Fund in maintaining a stable rate. The authors examine the reasons for the System's success and eventual collapse, compare it to subsequent monetary regimes, such as the European Monetary System, and address the possibility of a new fixed exchange rate for today's world.
After a century and a half of efforts at constructing arrangements and rules for international monetary interaction, present-day national authorities do not seem to have come much closer to achieving the aim of enduring exchange rate stability combined with a good macroeconomic performance. A distinguished group of economists and economic historians offers new insights into the working of the most important of such experiences, including nineteenth century bimetallism, the 'classical' gold standard, Bretton Woods and the European Monetary System.
After a century and a half of efforts at constructing arrangements and rules for international monetary interaction, present-day national authorities do not seem to have come much closer to achieving the aim of enduring exchange rate stability combined with a good macroeconomic performance. A distinguished group of economists and economic historians offers new insights into the working of the most important of such experiences, including nineteenth century bimetallism, the 'classical' gold standard, Bretton Woods and the European Monetary System.
This comprehensive history, published jointly by the IMF and Oxford University Press, was written to mark the fiftieth anniversary of international monetary cooperation. From the establishment of the postwar international monetary system in 1944 to how the framework functions in a vastly expanded world economy, historian Harol James describes the tensions, negotiations, challenges, and progress of international monetary cooperation. This narrative offers a global perspective on the events and decisions that have shaped the world economy during the past fifty years.
This book pinpoints continuities and changes in U.S. foreign economic policy from the fixed exchange rate system of the 1960s through to the period between the two oil crises of the 1970s. Chapters pay close attention to the interconnectedness between the long lasting decline of the U.S. Dollar on foreign exchange markets and the U.S. balance of payments, transformations in international capital markets, and international oil developments. The book charts the prolonged failure of Washington’s foreign economic policies to restore U.S. financial and monetary leadership through to the Carter Administration.
