The Clearing Union as Keynes's intellectual testament

This chapter explains that Keynes's Clearing Union represents the coherent and accomplished result of his lifelong speculation on how national economies should approach the complexity of their interconnectedness, as well as on how they can be helped by a supportive international architecture to achieve their targets. The seeds of Keynes's plan were sown over the previous thirty years. The main ideas that eventually gave shape to the proposal can be detected throughout his previous works, in significant passages of Keynes's theoretical writings, correspondence, articles, and proposals to reform the international monetary system. Free trade was established as a fundamental principle of the postwar economic order by the Atlantic Charter. For Britain, it implied renouncing the Imperial preference. The Clearing Union was intended to finance temporary current account imbalances, while restricting movements on capital account. Keynes proposed an adjustable pegs regime, as a kind of intermediate solution between fixed and flexible exchange rates.