Chapter 1: The International Monetary Convention Project: the search for a new equilibrium in the international monetary system
Marc Uzan The Reinventing Bretton Woods Committee was founded in 1994 to study the changes needed in economic institutions if they are to be eﬀective in this new environment. Unlike similar eﬀorts underway, the Committee’s work is based on the premise that whereas the emergence of a regional focus of economic power is a phenomenon that is relatively well understood, the shift in the relative weight of private versus public capital ﬂows in the world economy is less so. The establishment, 60 years ago, of the International Monetary Fund (IMF) and the World Bank was the most important achievement of international cooperation following the Second World War. The IMF was the guardian of the Bretton Woods regime of ﬁxed exchange rates, and its essential mission immediately after the war was to seek foreign exchange rate stability and a balance of payments equilibrium through three instruments: short-term ﬁnancing, policy surveillance and capital controls. The World Bank supported reconstruction and development through longterm ﬁnance and mobilization of private capital through risk transfers. Over the past 60 years, the world has witnessed tremendous changes in its political and economic regimes, largely altering the environment in which international ﬁnancial institutions (IFIs), including the IMF and the World Bank, pursued their activities. After the collapse of the Bretton Woods regime in 1971, the ﬁxed exchange rate system gave way to a ﬂoating exchange rate system. As a result of spreading liberalization of capital controls, the free ﬂow of capital became a fact of...
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