home > by publication type > op-eds > Bretton Woods, The Sequel?
Email
| Author: | Sebastian Mallaby, Director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics |
|---|
October 20, 2008
The Washington Post
The financial crisis is by no means over, but the urge to extract lessons from it already is irresistible. The Europeans have pressed successfully for a new Bretton Woods summit, modeled after the 1944 gathering that inoculated the world against a repeat of the Great Depression. Although the original Bretton Woods took place years after the Depression, Britain and France are bent on staging the new version within weeks. "Europe wants it. Europe demands it. Europe will get it," French President Nicolas Sarkozy said before jetting off to Camp David, where President Bush meekly gave in to him.
The Bretton Woods analogy is contrived, to put it mildly. That summit created the World Bank to reconstruct Europe after the ravages of World War II. Today, bombed-out infrastructure is hardly the issue. Bretton Woods also created the International Monetary Fund, to support a system of fixed exchange rates. But the world has largely abandoned that system, and today's chief exchange-rate challenge is to move even further from Bretton Woods by persuading China to float its currency.
Bretton Woods boosters assert that a global financial system needs global regulatory fixes. This claim deserves scrutiny. The fix that rightly commands widest support is moving the swap contracts between financial institutions onto centralized exchanges, so the collapse of one large player does not threaten others that entered into swaps with it. But this reform can be achieved with a minimum of international coordination. Countries can unilaterally establish swaps exchanges, and financial institutions all over the world can use them.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
Complete list of CFR Books
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.