A stable, global monetary order? Be prepared for change
Currencies are fiat, the ties to gold are gone, and most exchange rates for the major currencies are freely floating
This week marks the 75th anniversary of the Bretton Woods agreement, formulated among 44 allied nations in a New Hampshire hotel. To me, the most remarkable thing about the agreement is not that it collapsed but that it ever existed in the first place — and what that says about such arrangements more generally. By which I mean: every era’s monetary institutions are virtually unimaginable until they are created. Looking forward, don’t assume the status quo will hold forever — rather prepare to be shocked.
Consider the broader history of monetary and financial institutions. The gold standard (and sometimes bi-metallic) regime that marked the Western world from 1815-1914 was without precedent. In medieval times, gold, silver, copper and bills of exchange — from multiple issuers — all circulated as means of payment, and often there was no single dominant form of money. As the gold standard evolved, however, claims to gold became a global means of settling claims and easing foreign...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.