Moulding a new future

President-elect Trump’s threat of 100 per cent tariffs against BRICS is a manifestation of prevailing geopolitical tensions as the bloc challenges dollar hegemony, pushing for alternatives to IMF and the World Bank while activists also demand systemic reforms like debt cancellation of the global south and wealth redistribution to combat inequality

- DIPANKAR DEY

July 1, 2024 marked the 80th anniversary of the opening of the Bretton Woods Conference which birthed the World Bank (WB) and the International Monetary Fund (IMF)—the two major pillars of the international financial system set out at the United Nations in 1944. The US President Franklin D Roosevelt, supporting the creation of the IMF and the International Bank for Reconstruction and Development (IBRD—later the World Bank) said, in a message to the Congress: "The point in history at which we stand is full of promise and of danger. The world will either move toward unity and widely shared prosperity or it will move apart into necessarily competing economic blocs."

During the Bretton Woods negotiations, the British delegation—under the leadership of John Maynard Keynes—advocated the construction of a global clearing union to compensate for balance-of-payments disequilibria as well as the adoption of a truly international reserve unit. His idea of an international currency in ‘Bancor’ was also not accepted as these ideas clashed with the American hegemonic project and, in the end, a ‘gold-dollar standard’ was established. The Joint Statement between the US and the UK, a compromise between their respective proposals, was released on April 21, 1944. This statement laid the groundwork for an agreement on the IMF and introduced the concept of "gold convertible exchange," later modified to "gold convertible currency" in the working documents at Bretton Woods.