Bretton Woods System 1. The establishment of the Bretton Woods System (1) Historical background The Second World War caused major changes in the balance of power among imperialist countries.
Germany, Italy, and Japan were defeated countries, and their national economies were completely destroyed.
Although Britain and France were victorious, their industry and agriculture were severely damaged.
Only the United States stayed away from the battlefield. Instead of being destroyed, it made a lot of money from the war and further improved its political and economic status.
From 1938 to 1944, U.S. industrial production tripled.
In 1945, the gross industrial production of the United States accounted for 60% of that of capitalist countries, its exports accounted for one-third, and its gold reserves accounted for two-thirds of US$20 billion (this proportion further increased to three-quarters in 1948).
The war gave the United States absolute advantages in politics, economy, military and other aspects.
During the war, the United States provided more than 47 billion US dollars worth of arms to Britain, France and other allied countries through the Lend-Lease Act, and also took the opportunity to occupy the vast markets of Western European countries and their affiliated countries.
As foreign investment surged, the United States became the largest creditor nation.
All this creates special conditions for the dollar’s ??hegemony.
Although the UK's economic strength has declined, the pound area and the empire's preferential system still exist. 40% of international trade is still settled in pounds, and pounds are still the main international reserve currency.
For this reason, the UK still strives to maintain the status of the pound.
As early as during the war, the United States was actively planning to replace the British pound and establish an international monetary system centered on the U.S. dollar.
On April 7, 1943, the British and American governments simultaneously announced the "Keynes Plan" and the "White Plan" in London and Washington respectively.
(2) White Plan The White Plan is the "United Nations Stabilization Fund Plan" proposed by White, the Assistant Secretary of the Treasury, and its main contents are: International Finance 1.
Based on the fund system.
The fund is at least US$5 billion, and member states contribute their prescribed shares.
The size of the share is determined based on factors such as a member country’s gold foreign exchange reserves, international balance of payments, and national income.
2The fund currency is linked to the U.S. dollar and gold.
The currency unit specified by the fund is "Unita", and each "Unita" is equal to 10 US dollars or contains 137 grains of pure gold (1 grain = 0.0648 grams of pure gold).
3.
Voting rights depend on the share paid by member states.
The voice and voting rights of each member country in the IMF are proportional to the fund share it pays.
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Stable currency exchange rates.
The currencies of member countries must maintain a fixed parity with "Unita". Without the approval of three-quarters of the voting rights of the "Fund" member countries, the currencies of member countries cannot be devalued.
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Eliminate discriminatory measures such as foreign exchange controls, bilateral settlements and multiple exchange rates.
6. Adjust the international balance of payments.
Provide short-term credit to member states to resolve balance of payments deficits.
7 The offices of the Fund are located in the country with the largest share.
The White Plan attempts to have the United States control the "United Nations Stabilization Fund" and use the "Fund" to "peg" the currencies of member states to the U.S. dollar.
The plan is also based on the lifting of foreign exchange controls and national restrictions on international fund transfers.
(3) Keynesian Plan The Keynesian Plan is the "International Clearing Union Plan" formulated by Keynes, the consultant to the British Treasury. Its main contents are: (l) Establishing an "International Clearing Union", equivalent to the World Bank.
(2) The central banks of member states open current accounts in the Alliance, and official external claims and debts of each country are settled through this account by transfer.
(3) The surplus country deposits the surplus into the account, and the deficit country can apply for overdraft or withdrawal from the "alliance" according to the prescribed share.
(4) The accounting unit of the "Alliance" account is "Bancor", which is denominated in gold.
Member states can exchange gold for "bancor", but they cannot exchange "bancor" for gold.
(5) The currencies of various countries are priced in "banco" and cannot be changed without the approval of the "Alliance" Council.
(6) The share of member states in the "Alliance" is calculated based on 75% of the average import and export trade volume in the three years before the war.
(7) The "Alliance" is headquartered in London and New York, and its board of directors meetings are held alternately in the United Kingdom and the United States.
Keith's plan was based on Britain's predicament at the time and minimized the role of gold.
This plan actually advocates the restoration of multilateral settlement and the abolition of bilateral settlement.
Of course, it also exposed Britain's intention to share international financial leadership with the United States.
(4) Establishment of the Bretton Woods System Although the White House Plan and the Keynesian Plan both aimed at establishing international financial institutions, stabilizing exchange rates, expanding international trade, and promoting world economic development, their operating methods were different.
Since Britain's economic and military strength was inferior to that of the United States, the two sides reached an "Experts' Joint Statement on the Establishment of a National Standard Monetary Fund" in April 1944 that basically reflected White's plan.
On July 1, 1944, the United Nations Monetary and Financial Conference (referred to as the Bretton Woods Conference) attended by representatives from 44 countries was held in Bretton Woods, New Hampshire, USA.