International Monetary Systems

This lecture on International Monetary Systems by Joseph Salerno was presented at the 2011 Mises University in Auburn, Alabama.

International monetary systems are allegedly sets of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investment and generally the reallocation of capital between nation states. They might provide means of payment acceptable between buyers and sellers of different nationality, including deferred payment. To operate successfully, they need to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade and to provide means by which global imbalances can be corrected. The systems can grow organically as the collective result of numerous individual agreements between international economic actors spread over several decades. Alternatively, they can arise from a single architectural vision as happened at Bretton Woods in 1944.

Joseph T. Salerno is an economist of the Austrian School who resides in the United States.  A professor at Pace University, Salerno is an active scholar in the areas of banking and monetary theory, comparative economics, and the history of economic thought.  He is a senior faculty member of the Ludwig von Mises Institute, for which he frequently lectures and writes, and he serves as editor of the Institute’s Quarterly Journal of Austrian Economics.

The United Nations Monetary and Financial Conference, commonly known as the Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial order after the conclusion of World War II.

The conference was held from 1-22 July 1944, when the agreements were signed to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF).

As a result of the conference, the Bretton Woods system of exchange rate management was set up, which remained in place until the early 1970s.