Design of The Financial System
Free trade relied on the free convertibility of currencies. Negotiators at the Bretton Woods conference, fresh from what they perceived as a disastrous experience with floating rates in the 1930s, concluded that major monetary fluctuations could stall the free flow of trade.
The new economic system required an accepted vehicle for investment, trade, and payments. Unlike national economies, however, the international economy lacks a central government that can issue currency and manage its use. In the past this problem had been solved through the gold standard, but the architects of Bretton Woods did not consider this option feasible for the postwar political economy. Instead, they set up a system of fixed exchange rates managed by a series of newly created international institutions using the U.S. dollar (which was a gold standard currency for central banks) as a reserve currency.
Read more about this topic: Bretton Woods System
Famous quotes containing the words design of, design, financial and/or system:
“Humility is often only the putting on of a submissiveness by which men hope to bring other people to submit to them; it is a more calculated sort of pride, which debases itself with a design of being exalted; and though this vice transform itself into a thousand several shapes, yet the disguise is never more effectual nor more capable of deceiving the world than when concealed under a form of humility.”
—François, Duc De La Rochefoucauld (1613–1680)
“You can make as good a design out of an American turkey as a Japanese out of his native stork.”
—For the State of Illinois, U.S. public relief program (1935-1943)
“A theory of the middle class: that it is not to be determined by its financial situation but rather by its relation to government. That is, one could shade down from an actual ruling or governing class to a class hopelessly out of relation to government, thinking of gov’t as beyond its control, of itself as wholly controlled by gov’t. Somewhere in between and in gradations is the group that has the sense that gov’t exists for it, and shapes its consciousness accordingly.”
—Lionel Trilling (1905–1975)
“Society cannot share a common communication system so long as it is split into warring factions.”
—Bertolt Brecht (1898–1956)