The Bretton Woods International Monetary System: An Historical Overview

148 Pages Posted: 19 Jul 2004 Last revised: 21 Nov 2013

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 1992

Abstract

This paper presents an overview of the Bretton Woods experience. From an historical perspective. I analyze its performance relative to other international monetary regimes. its origins. its operation. its problems and its demise. In the survey I emphasize both issues deemed important at the time and raise questions which may be of interest for the concerns of the present. Part 2 compares the macro performance of Bretton Woods with preceding and subsequent monetary regimes. The descriptive statistics on nine key macro variables point to one startling conclusion -- the Bretton Woods system. in its full convertibility phase 1959-1971, was the most stable regime for both nominal and real variables in the past century. Part 3 surveys the origins of Bretton Woods: the perceived problems of the inter war period; the plans for a new international monetary order and the steps leading to the outcome -- the Articles of Agreement. Part 4 examines the preconvertibility period from 1946 to 1958: the problems in getting the system started including the dollar shortage and the weakness of the IMF; and how the system evolved to convertibility and the gold dollar standard. Part 5 analyzes the heyday of Bretton Woods 1959 to 1971 in the context of the gold dollar standard and the famous three problems: adjustment. liquidity, and confidence. Part 6 considers the emergence of a "de facto" dollar standard in 1968 and its collapse in the face of a massive U.S. induced inflation. Part 7 considers why Bretton Woods was so stable and yet so short-lived. It also considers the importance of adherence to credible rules in the design of an effective international monetary system.

Suggested Citation

Bordo, Michael D., The Bretton Woods International Monetary System: An Historical Overview (March 1992). NBER Working Paper No. w4033. Available at SSRN: https://ssrn.com/abstract=226896

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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