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Handbook of the International Political Economy of Monetary Relations

Handbook of the International Political Economy of Monetary Relations

Handbooks of Research on International Political Economy series

Edited by Thomas Oatley and W. Kindred Winecoff

This extensive Handbook provides an in-depth exploration of the political economy dynamics associated with the international monetary and financial systems. Leading experts offer a fresh take on research into the interaction between system structure, the self-interest of private firms, the political institutions within which governments make policy, and the ideas that influence beliefs about appropriate policy responses. Crucially they also assess how these factors have shaped the political economy of various facets of monetary and financial systems.

Chapter 6: The Triffin dilemma, the Lucas paradox, and monetary politics in the twenty-first century

W. Kindred Winecoff

Subjects: economics and finance, political economy, politics and public policy, international politics, political economy, public policy


The MacGuffin in Ian Fleming's 1959 novel Goldfinger is James Bond's ability to save the international monetary system. 007 is tasked with stopping the illegal export of gold from Britain in order to protect the value of the British pound sterling. The significance of this would have been present in the minds of contemporary readers. In 1956 Britain's capital controls were failing, and the United States leveraged this fact to require British withdrawal from Egypt during the Suez Crisis. In exchange, the International Monetary Fund (IMF) extended emergency finance to Britain in 1957 and the United Kingdom (UK) established currency convertibility the next year. This was the first major lending program in the IMF's history, and illustrated the geopolitical value that came from control of the international monetary system. As Fleming's story progresses, so does the threat, which expands to include the theft of the United States' gold supply at Fort Knox by the Soviet agent Auric Goldfinger. Such a heist would destabilize the Bretton Woods system of pegged exchange rates and controlled capital movements that was contingent upon the United States (US) government's ability to maintain the link between dollar and gold. Without gold backing the value of the dollar would decline precipitously, the international monetary system based on it would collapse, and the development of the Western post-war economy would be in jeopardy.

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