The future of the International Financial System
The Bretton Woods twins were conceived during a world war that followed a world depression. They were created by men who hoped to make the world depression-proof. We have not had a great depression since the war but have suffered the opposite malaise of inflation. Nevertheless, the twenty-five years since the founding have been years of prosperity unparalleled in history. It would be hard to say how much credit is due the Fund and Bank for this prosperity, but that fact alone should make us cautious about unbridled criticism. We do not know what would have happened had the Bretton Woods Agreement not been ratified, but the fact that the Fund has presided over a remarkable era in economic history shifts the burden of evidence onto the Fund’s critics. I include myself in the latter group, but primarily because we want to see the present era of prosperity continue and I believe reform of the Fund can enhance the chances that it will.
KeywordsExchange Rate Monetary Policy Flexible Exchange Rate Exchange Rate Change International Monetary System
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