The Bretton Woods System Essay -- Economics

The theme of this essay outlines two things. One, the key elements of Bretton forest scheme and second, the characterisation of Bretton woods system by Ruggie as enter big(p)ism, and how far he succeeds in it. The Bretton woods system is widely referred to the internationalistic monetary regime, which prevailed from the end of the World War 2 until the early 1970s. after(prenominal) the end of the World War 2, the need of international monetary framework to boost trade and economic growth and stability, was important. Taking its name from the identify of the 1944 conference, attended by all forty-four allied nations the Bretton Woods system consisted of four key elements. First, to make a system in which each member nation has to fix or peg his currency transfer rate against the gold or U.S. dollar, as the key currency. Secondly, the plain put back of currencies between countries at the established and fixed rallying rate overconfident or minus a one-perc ent margin. Thirdly, to create an institutional forum, so-called world(prenominal) Monetary Fund (IMF), for the international co-operation on money matters to set up, stabilize, and take over exchange rates. Fourth, to remove all the existing exchange controls constrictive (protectionism) policies by the members, on the use of its currency for international trade. In answer the first scheme, as well as its later development and closing demise, were directly dependent on the preferences and policies of its most powerful member, the United States. accord to John Gerard Ruggie, 1982, this Bretton woods system of monetary co-operation represented the type of liberalism which condition domestic social economic stability along with a liberal trading order. He referred this system as embed... ...aracterised Bretton woods system as embedded liberalism to show how market forces were surrounded by social and governanceal constraints. Embedded liberalism thus signifies a compromis e between the excessive free international market economics and the excessive domestic protectionist policies. Ruggie embedded liberalism represented an enclosed international liberal trade within the post-war consensus of fixed exchange rates and capital controls. The fixed exchange rate helped to promote durable liberal trade by removing any future uncertainty in exchange rate movements. Whereas for domestic social and economic stability, national government would use capital controls. All these practices were the key elements of Bretton woods system and in like manner constitute the institution of embedded liberalism. Hence, Bretton woods system can be characterised as embedded liberalism.