Giovanni Tria and Angelo Federico Arcelli present their new work: “A New Bretton Woods for a New World. Reflections about the Future 80 years after the Bretton Woods Conference”

ISEA – Center for Studies in Applied Economics – is pleased to announce the release of the new book titled A New Bretton Woods for a New World, written by Professors Giovanni Tria and Angelo Federico Arcelli, both Senior Fellows at ISEA.

The volume, which examines the relevance and evolution of the international monetary system 80 years after the historic Bretton Woods Conference, offers an in-depth reflection on the current and future challenges facing the global financial architecture. The authors analyze how today’s economic, political, and technological context, shaped by digitalization and increasing global competition, is influencing the role of central currencies and international institutions, highlighting the urgency of new governance.

A New Bretton Woods for a New World. Reflections about the Future 80 years after the Bretton Woods Conference will be presented on October 21, 2024, from 4:30 PM to 6:00 PM, at The American German Institute, 1776 Massachusetts Ave NW, Washington, DC. Following this, a second event will take place on October 22, 2024, in Washington, DC, during a joint meeting with the Center for International Governance Innovation (CIGI). Further events, both in person and online, will be organized, aimed at the general public and the scientific community.

The book will be available for free for download on the official ISEA website.

Abstract

A new Bretton Woods for a new World – Reflections about the Future 80 years After the Bretton Woods Conference

The Bretton Woods system established in the aftermath of the Second World War afforded the United States an “exorbitant privilege” as the owner and sole issuer of the world’s central currency, the U.S. dollar. The role of the U.S. dollar (and somehow, in recent years, that of the euro) gave, and still gives the United States and its allies powerful leverage to influence competing powers and affords the West a position of indisputable leadership beyond military and geopolitical factors. But China’s rise and its determination to compete for global leadership include efforts to increase its weight in international trade and payment transactions.

The international monetary system has therefore evolved, and we could find ourselves on the verge of a significant change, driven by the changing nature of globalization, and the de-risk priorities, and by the digital revolution with all its consequences. The shift in the available set of payment tools that it represents is putting such pressure on central banks worldwide that the idea of developing CBDCs is gaining traction, also as a defensive move aiming at maintaining the full control of monetary policy.

In this book, drawing on a previous work, the authors start by recalling the historical background that led to the Bretton Woods agreements and presenting some reflections both on the weaknesses of the system agreed, that led to its collapse in August 1971, and on the reasons which have led, de facto, to an international monetary system still centred on the US dollar. They also describe how even this de facto system, by some referred to as the Second Bretton Woods, preserves much of the characteristics and, consequently, of the weaknesses of the system established in 1944, while in a different global macroeconomic and political context.

Then, they analyse why the conditions which have enabled the dollar to be kept as a linchpin of the international monetary system over the past few decades are weakening, endangering its sustainability, beyond its contested desirability, also in the face of the challenges posed by the spread of new digital currencies and means of payment in a context of de- globalization and protectionism trends which also represent growing factors of uncertainty.

Finally, the authors propose some ideas about the desirability, if not the necessity, of a shared path for the reform of the international monetary system, to govern its future evolution and to mitigate the uncertainties, and of the international institutions, both to regain authority and legitimacy, and to ensure a sustainable new agreement.

The hope is that a debate takes place, optimally in an international forum such as the IMF, that could lead to a negotiation for a progressive realization of a new Bretton Woods-like agreement, which should either
a) mirror the current emerging market trend of a linked multipolar currency scheme (a “quasi-bancor” scenario) anchored to a supranational tool, or b) head towards a new supranational currency anchored to a basket of national currencies bound by soft rules.