What Has Happened So Far: The Long History of USDollar Dominance
July 1944: More than 700 delegates from 44 nations meet at the Mount Washington Hotel in Bretton Woods, New Hampshire. Among them: the US, Canada, Australia, Japan, and some European powers. One year before the end of the war, they decide on the world’s new monetary order: the first and, so far, only monetary system based on international treaties. ...
In the 1960s, economist Robert Triffin warnsof the contradictions in the Bretton Woods system. According to Triffin, the use of a national currency as the main international reserve currency will eventually lead to conflict between said country’s national needs and those of the world economy. Triffin predicts that the gold peg of the USdollar will fail. ...
On August 15, 1971, US President Richard Nixon ends the Bretton Woods monetary system after a quarter-century. He cancels the gold peg of the USdollar. At first, this is merely “temporary” and is intended to “strengthen” the US economy. At this point, the US has “only” about 8,000 tons of gold in its reserves. ...
In 1976, the Bretton Woods system is formally buried by the Jamaica Accords. In the early 1980s, all developed countries allow their currencies to fluctuate. For the first time in history, the whole world is on a pure paper money standard, with one exception: Switzerland formally keeps the franc pegged to gold until 1999. ...
In the 1980s, the system stabilized. The Europeans, however, have by now long been working on their own currency, which should make them independent of the US dollar system. The advocates of the Special Drawing Rights and the IMF were not idle either. In 1984, economist Richard Cooper proposes a global single currency – with a common monetary policy and a common central bank. The US, Europe and Japan are to be the first nations to join. ...
In December 1995, the EU states agree on a name for the common currency: the euro. On January 1, 1999, the euro is introduced. Gold plays an important role for the new currency from the very beginning. But under the first ECB president, Wim Duisenberg, the euro is not pegged to gold as the USdollarwas under the Bretton Woods system. ...
In the wake of the great financial crisis and the Lehman bankruptcy, concerns grow again that the USdollar system may have reached its end.
In March 2009, the head of the People’s Bank of China (PBoC), Zhou Xiaochuan, speaks out for the first time. In a remarkable speech at the Bank for International Settlements (BIS), he calls for a move away from the USdollar and the establishment of a new monetary system. China’s central bank chief makes direct reference to the entire monetary history since 1944 and quotes Keynes and his bancor idea. ...
After the West blocked Russia's currency reserves, we see open rupture in the international currency architecture. For the first time, active resistance to the dominance of the U.S. dollar begins to emerge. Not only in Russia and China, but also in South America, Africa and Southeast Asia - and again in Europe. ...
