New Bretton Woods System?

*Before I get going on my blog entry, I just want to point out that as I looked at the two blog entry questions for this week, unlike the majority of my classmates, I chose to blather on Bretton Woods System rather than Alien Ambassador. Even though I missed the whole discussion on this subject and do not 100% understand the system, I would rather write on it because I personally think that the idea of Alien Ambassador speaks for itself and is too outrageous and ridiculous that I don't even have anything to say about it other than 'I think it is the most absurd idea I have ever heard.'


If I understood correctly, Bretton Woods System was established in 1940s post-WW2 to rebuild the international economic system when the global recession was dragged out for too long after the Great Depression in 1930s. Based on the ideas of fixed exchange rate, the gold standard, gold-dollar conversion system, and the establishments of IMF(International Monetary Fund) and IBRD(International Bank for Reconstruction and Development) for post-war reconstruction and development of underdeveloped countries, Bretton Woods System has done a pretty good job fulfilling what it was expected to do at the time especially during the post-war reconstruction and the Cold War. It helped to stabilize the currency trade market and stimulated the flow of currency between nation-states. It established the first set rules of international commercial and financial relations.

However, as the global market and economy changes time to time, the system has become unfit for the fast changing global economic system. After 1960s, the loss of credibility of US dollar and international liquidity dilemma arose and in 1970s, the U.S. dollar became weak and unstable because of the deficit of the US due to funding of the Vietnam War. After Nixon's claim to terminate convertibility of the dollar to gold, Bretton Woods System has naturally become almost extinct.

I think Bretton Woods System's collapse was completely natural and even helped the evolution of the global economic system. The currency market has become dependent on the law of supply and demand which temporarily enabled the currency to circulate more freely among major industrial nation-states. Stepping into 1980s, capital exchange between countries rapidly increased due to technological development and the arrival of information-oriented era. The global economic linkage has expanded not only to North America and Europe, but also to Asia, South America, and even to Africa.

As the international economy evolves and expands, I believe it demands a newly adjusted Bretton Woods System like many other have argued. A new system to regulate and spur the global economy is needed. A number of world leaders, like the French president, Nicolas Sarkozy and the English Prime minister Gordon Brown, have argued the need of an adjusted Bretton Woods System, aka Bretton Woods System 2. As the world is becoming multipolar, shouldn't only the U.S. dollar the measure of currency exchange, but also those of other major economic countries, and that of further more countries should work together to establish a multipolar international monetary system.



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Reference
-dearest Wikipedia
http://en.wikipedia.org/wiki/Bretton_Woods_system#Bretton_Woods_II
-bunch of Korean websites
http://blog.naver.com/fillesvertes?Redirect=Log&logNo=20108318037
http://cafe.naver.com/onebank.cafe?iframe_url=/ArticleRead.nhn%3Farticleid=16094