But he cautioned, ‘There will not be any dramatic change, that would be to the detriment of all partners.’ This was evolving towards a multicurrency system in which the renminbi would eventually play a larger role. At the launch of OMFIF’s eighth annual Global Public Investor in July, the former president of the European Central Bank noted a shift away from the dollar’s pre-eminence, in what he called ‘smooth, progressive, orderly changes’ in the international monetary framework. A new one was needed, less dependent on bank balance sheets ‘to attract more capital into sustainable investments.’Īnother leading figure talking of changes ahead is Jean-Claude Trichet. We need to rethink their model,’ Fink said. ‘When it comes to unlocking fiduciary assets, pension fund assets and asset owner capital, we need to rethink the role of these institutions. In similar vein, Larry Fink, chief executive of fund manager Blackrock, at a conference at the G20 summit in Venice, urged a total overhaul of the ’outdated’ Bretton Woods institutions. ‘Untold human desperation in the face of huge disruption and rising poverty’ meant ‘once again, we face two massive tasks: to fight the crisis today and build a better tomorrow.’ At the October 2020 annual meeting of the lynchpins of the post-1944 system, the International Monetary Fund and World Bank, Kristalina Georgieva, IMF managing director, said the pandemic confronted the world with a ‘new Bretton Woods moment’. Demands are multiplying for a reshaping of the economic system, and the institutions at its centre, to meet the needs of a world fighting both climate change and the consequences of the Covid-19 pandemic. Half a century later, we are at another turning point. President Georges Pompidou sent a French naval ship to Manhattan docks to exchange $191m for gold, stored at the New York Federal Reserve Bank, and bring it to the Banque de France. By presidential fiat, Nixon dismembered the post-war monetary and financial order set up at Bretton Woods in 1944 with the dollar as its pivot.Īs the condition for this ‘exorbitant privilege’, America had to promise countries would always be allowed to exchange surplus dollars for gold. Nixon’s TV address on 15 August 1971 was the ultimate reaction to the cumulative 1965-71 loss of half of America’s gold holdings. Are we are nearing another monetary reset to match President Richard Nixon’s closure of the gold window?
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