In the face of the current crisis, there is growing demand for regulation, ofteninvoked in terms of a 'return to Bretton Woods'. The Bretton Woods Conferenceof 1944 was indeed the last explicit attempt to define a rule for international settlements.In fact, post-World War II currency negotiations gave place to a confrontationbetween two alternative visions of the international monetary system. Thetwo plans set forth by the U.S. and by the U.K. embody two alternative principles:the first aims at producing international liquidity on the basis of a reserve currency(White's plan for an International Stabilization Fund); the second aims at providinga pure means and measure for the multilateral clearing of current accounts inthe form of a currency unit (Keynes's plan for an International Clearing Union).The former has undoubtedly prevailed. However, it is questionable whether it is themost appropriate way to manage global imbalances. Indeed, the principle eventuallyembodied in the Bretton Woods system, and persisting even after its demise, tendsto identify money with a reserve asset, making possible, and even necessary, theaccumulation of global imbalances, despite original intentions to reabsorb them.On the contrary, the principle that inspired the alternative plan was intended todeprive money of the character of a reserve asset, thus making it the rule for internationalexchanges, rather than an object of regulation among others. This paperoutlines the two principles both in historical perspective and in the perspective offuture reforms, particularly in relation to the recent proposal by the governor of thePeople's Bank of China to go back to the principles of the Keynes plan.

Back to which Bretton Woods? Liquidity and clearing as alternative principles for reforming international money / M. Amato, L. Fantacci. - In: CAMBRIDGE JOURNAL OF ECONOMICS. - ISSN 0309-166X. - 38:6(2014), pp. 1431-1452. [10.1093/cje/beu030]

Back to which Bretton Woods? Liquidity and clearing as alternative principles for reforming international money

L. Fantacci
2014

Abstract

In the face of the current crisis, there is growing demand for regulation, ofteninvoked in terms of a 'return to Bretton Woods'. The Bretton Woods Conferenceof 1944 was indeed the last explicit attempt to define a rule for international settlements.In fact, post-World War II currency negotiations gave place to a confrontationbetween two alternative visions of the international monetary system. Thetwo plans set forth by the U.S. and by the U.K. embody two alternative principles:the first aims at producing international liquidity on the basis of a reserve currency(White's plan for an International Stabilization Fund); the second aims at providinga pure means and measure for the multilateral clearing of current accounts inthe form of a currency unit (Keynes's plan for an International Clearing Union).The former has undoubtedly prevailed. However, it is questionable whether it is themost appropriate way to manage global imbalances. Indeed, the principle eventuallyembodied in the Bretton Woods system, and persisting even after its demise, tendsto identify money with a reserve asset, making possible, and even necessary, theaccumulation of global imbalances, despite original intentions to reabsorb them.On the contrary, the principle that inspired the alternative plan was intended todeprive money of the character of a reserve asset, thus making it the rule for internationalexchanges, rather than an object of regulation among others. This paperoutlines the two principles both in historical perspective and in the perspective offuture reforms, particularly in relation to the recent proposal by the governor of thePeople's Bank of China to go back to the principles of the Keynes plan.
Bretton Woods; Clearing union; International Monetary Fund; International monetary system; John Maynard Keynes; Liquidity
Settore SECS-P/12 - Storia Economica
2014
Article (author)
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/926808
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